Recommendations Archive

FAG Bearings 3QCY2011 performance highlights and results update

FAG Bearings’ (FAG) 3QCY2011 results came in ahead of our expectations even as the automotive and industrial segments witnessed slow activity during the quarter. Results came in above expectations on the revenue and earnings fronts. We revise upwards our earnings estimates to factor in strong operating performance. We maintain our Accumulate view on the stock.For 3QCY2011, FAG reported a strong 22.5% yoy (4.5% qoq) increase in revenue to Rs.334cr, above our expectation of Rs.311cr. Revenue performance exceeded estimates in spite of sluggish demand in the automotive and industrial markets. EBITDA margin expanded by 216bp yoy (down 51bp qoq) to 19.8%, largely due to a decline in other expenses. Other expenditure as a percentage of sales declined by 259bp yoy. However, the dip in other expenditure was offset by the depreciation of INR against EUR during the quarter, which led to a 138bp yoy increase in traded goods as a percentage of sales.

Godrej Consumer 2QFY2012 performance highlights and results update

Godrej Consumer (GCPL) posted a modest set of numbers for the quarter, largely in-line with our estimates. Consolidated top-line growth was strong at 24.5% yoy. The domestic business grew by healthy 24% yoy, led by all three categories, household insecticides, soaps and hair colors. On the international business front, Indonesia and Latam grew strongly. We maintain Accumulate on the stock.Consolidated top line grew by 24.5% yoy with domestic sales and international business posting healthy growth of 24% and 19% yoy, respectively. Soaps, household insecticides and hair colors performed well for the company. On the operating front, the company reported a marginal decline in its margins (down 23bp yoy) and came in at 17.6%. Recurring PAT grew by 13.3% yoy; whereas on a reported earnings basis, the company posted a decline of 2.5% yoy in earnings and stood at Rs.128cr (Rs.131cr).

Cairn India 2QFY2012 performance highlights and results update

Cairn India’s (CIL) 2QFY2012 net sales decreased by 1.3% yoy despite a 48.0% yoy increase in crude realization due to royalty payment. The company’s adjustedPAT decreased by 85.6% due to one-time royalty adjustment. We maintain our Neutral view on the stock.Despite increased crude oil realization by 48.0% yoy to US$102.8/bbl, net sales decreased by 1.3% to Rs.2,652cr due to royalty payment of Rs.770cr. Operating profit decreased by 4.5% yoy to Rs.2,104cr during the quarter. The company provided for previous outstanding royalty on Rajasthan share of Rs.1,355cr. Excluding the exceptional forex gain of Rs.531cr, adjusted net profit declined by 85.6% yoy to Rs.232cr.

Idea Cellular 2QFY2012 performance highlights and results update

For 2QFY2012, Idea Cellular (Idea) reported modest revenue growth, which was in-line with our expectation; however, the company disappointed on the bottom-line front. The major highlight of the result was inching up of average revenue per minute (ARPM) by 4.1% and VAS share in mobility revenue increasing to 13.2% from 12.1% in 1QFY2012. We maintain our Neutral view on the stock.For 2QFY2012, Idea reported consolidated revenue of Rs.4,620cr, up 2.2% qoq, on the back of 4.1% qoq growth in ARPM to Rs.0.427/min and subscriber growth of 5.4% qoq with end-of-period (EoP) subscriber base standing at 100.2mn. The effect of these positive factors was partially overshadowed by the negative impact from the decline in minutes of usage (MOU) by 6.9% qoq to 364min from 391min in 1QFY2012. EBITDA margin decreased by 95bp qoq to 25.7% due to higher employee costs and roaming and access charges.

NIIT 2QFY2012 performance highlights and results update

For 2QFY2012, NIIT reported modest performance, which was in-line with our expectations. Revenue growth was driven by all businesses, but operational performance was dented due to the ILS business, which posted a 273bp yoy dip in EBITDA margin. The company will be getting US$75mn as net income from the divestment of Element K business, which the company will use to reduce its debt by Rs.250cr. We maintain our Buy rating on the stock.For 2QFY2012, NIIT reported consolidated revenue of Rs.384cr, up 19.5% yoy. Revenue from ILS, SLS and CLS businesses increased by 11.9%, 12.4% and 9.6% yoy to Rs.180.2cr, Rs.40.5cr and Rs.163.0cr, respectively. Blended EBITDA margin of NIIT improved by 501bp yoy to 14.6% on the back of margin expansion in SLS as well as CLS businesses.

KPIT Cummins 2QFY2012 performance highlights and results update

For 2QFY2012, KPIT Cummins Infosystems (KPIT) reported lower-than-expected performance. The company has transferred its diversified financial services (DFS) business to Intrasoft Technologies, as it was not the focus area of the company and was having just 2-3 clients. For FY2012, management maintained its USD revenue guidance of US$275mn-285mn i.e., 23-27% yoy growth. We recommend a Neutral rating the stock. For 2QFY2012, KPIT reported revenue of US$70.1mn, up merely 0.4% qoq, majorly led by 5.0% volume growth. Excluding revenue from the DFS business, on a like-to-like basis, revenue came in at US$70.16mn vs. US$67.08 in 1QFY2012, up 4.6% qoq. In INR terms, revenue came in at Rs.325cr, up 2.8% qoq.

UltraTech Cement 2QFY2012 performance highlights and results update

During 2QFY2012, UltraTech Cement (ULTC) posted 140.9% yoy growth in its bottom line to Rs.279cr on a low base. Bottom-line growth was largely on account of substantial 19.2% yoy growth (down 5% sequentially) in realization, even as domestic dispatches rose by nominal 2.3% (yoy) to 9.16mn tonnes, impacted by slowdown in demand from the housing and infrastructure sectors and the ongoing Telangana agitation in Andhra Pradesh, where the company has a significant presence. We remain Neutral on the stock.During 2QFY2012, UltraTech’s net sales grew by 21.6% yoy to Rs.3,910cr, primarily on account of higher realization.

Bajaj Auto 2QFY2012 performance highlights and results update

BAL reported strong 21.3% yoy (10.3% qoq) growth in its top line to Rs.5,267cr, led by a 16.3% yoy (6.5% qoq) jump in volumes and a 3.7% yoy (3.3% qoq) increase in net average realization. Volume performance was driven by robust 37.9% yoy (flat qoq) growth in exports volume, leading to an impressive 50.3% yoy (2.7% qoq) jump in exports revenue. Domestic volume growth was slightly muted and stood at 6.8% yoy (11.3% qoq). Net average realization improved mainly on account of better product mix and price increases. The company’s EBITDA margin at 20.1% (up 100bp qoq) surprised positively, led by qoq and yoy improvement in raw-material expenses, which declined by 97bp yoy (110bp qoq), accounting for 70.6% of sales.

DB Corp. 2QFY2012 performance highlights and results update

DB Corp. (DBCL) reported modest performance on the revenue front and weak performance on the earnings front. The company’s top-line growth was driven by a mix of ad revenue growth and circulation revenue growth. On account of new launches in Maharashtra and Jharkhand, earnings for the quarter declined. We maintain our Buy recommendation on the stock.For 2QFY2012, the company’s top line grew by 17.6% yoy (flat qoq) at Rs.354cr. Consolidated ad revenue for the quarter grew by 15.9% yoy to Rs.274cr. The company’s circulation revenue grew by impressive 13% yoy and 5.8% qoq on account of new edition launches in Maharashtra andJharkhand. DBCL reported a weak set of numbers on the earnings front primarily on account pre-operative expenses of Rs.9.9cr and operating losses on the three editions launched in the above-mentioned states.

Yes Bank 2QFY2012 performance highlights and results update

For 2QFY2012, Yes Bank reported a strong performance. Net profit grew by 33.3% yoy (8.8% qoq) to Rs.235cr, above our estimate of Rs.216cr. Profit growth was driven by 10bp increment in NIM and strong non-interest income, which registered 63.4% yoy growth. The bank continued with its strategy of slower balance sheet growth in 2QFY2012 to manage margins and risks in the current environment. We maintain our Accumulate rating on the stock.The bank continued with its strategy of slower balance sheet growth in 2QFY2012 to manage margins and risks in the current environment. Advances grew by 12.7% yoy (3.3% qoq) and deposits grew by 10.2% yoy (1.1% qoq). CASA deposits accretion remained healthy at 19.7% yoy (almost flat qoq). The bank managed to increase its CASA ratio marginally by 4bp qoq to 11.0% due to the relative slower deposit growth.

KPIT Cummins Infosystems Ltd. Q2 FY12 results update by Nirmal Bang

For Q2FY12, the company posted 7.1% qoq growth in revenues. EBIDTA margins improved 105 basis points and Profits were higher at 51% qoq due to higher forex gains.The company has divested its diversified financial services (DFS) business to Intrasoft Technologies. On a like to like basis, revenues grew 7.1% qoq at Rs.324crore. This is on the back of 5% volume growth and other non-linear initiatives of the company.EBIDTA margins improved by 105bps to 13.65% on the back of lower selling and marketing expenses.Company aims to reach EBIDTA margins of 15%-16% for FY12 with better offshore utilization and operational efficiency.

Axis Bank Q2 FY12 results update by Nirmal Bang

Axis Bank Ltd (Axis Bank) posted a healthy operating performance for Q2FY12 in line with expectations. Net profit was driven by a sharp improvement in NIMs, healthy fee income growth and strong CASA mobilization. However, the bank witnesses higher slippages in the last 6 quarters which came in negative and still poses a threat for the bank.The bank’s loan book grew at a healthy pace at 26.7% on YoY basis and 6.2% QoQ. Advances growth was led by the corporate loan and retail segments.

Ajanta Pharma Ltd Q2 FY12 results update by Nirmal Bang

Decent Performance (Standalone results): During the quarter, the company reported sales growth of 20.1% yoy at Rs 135.1 cr. However due to forex loss and higher interest cost PAT grew by only 17.9% yoy at Rs 11.9 cr. PAT margins have remained flat at 8.8% as compared to 8.9% in Q2FY11.EBITDA margins have improved sequentially to 17.2% from 16.7% in Q1FY12. However higher depreciation and higher interest cost has negated the gains and resulted in decline in PAT sequentially (Rs 11.9 cr v/s Rs 12.5 cr).

IDBI Bank 2QFY2012 performance highlights and results update

For 2QFY2012, the bank’s advances grew marginally by 0.6% qoq (up 19.7% yoy). Deposits declined marginally by 1.0% qoq (up 13.0% yoy). CASA deposits growth continued to be healthy at 42.2% yoy (up 9.9% qoq), leading to a 393bp yoy improvement in CASA ratio to 19.2%. The surge in CASA deposits was led by robust 67.2% yoy growth in saving account deposits. In spite of the increase in share of CASA in the funding mix, reported NIM of the bank contracted, albeit marginally, by 7bp qoq to 2.0%. On the asset-quality front, the deteriorating trend continued with the annualised gross slippage ratio rising to 2.4% from 1.6% in 1QFY2012.

Hexaware 3QCY2011 performance highlights and results update

For 3QCY2011, Hexaware reported robust set of results. Major highlights of the results were whopping growth of 9.2% qoq and considerable operating margin expansion, despite wage hikes given to onsite employees during the quarter. Hexaware has been outperforming in the mid-cap space since a year by growing at a scorching 7.5% CQGR over 2QCY2010–3QCY2011. Management has been outperforming its guidance every quarter and has guided for at least 32% yoy revenue growth for CY2011. We expect the company to continue its revenue growth on the back of increasing traction for enterprise services as well as continue its operational exuberance. We recommend Neutral on the stock.

Crompton Greaves 2QFY2012 performance highlights and results update

Crompton Greaves (CG) reported a weak performance for 2QFY2012, which was in-line with our estimates but significantly below street expectations. Although CG has posted decent numbers on the top-line front, the company’s margin has dragged its earnings, as expected. Since we have downgraded the CG stock, it has fallen by ~26.5% and underperformed the BSE Sensex by ~24.3%. We believe CG is still facing headwinds on the business front and the outlook remains bleak for the entire FY2012. However, given the potential in the company, our estimates build in conservative assumptions and current undemanding valuations, after the sharp fall in stock price, we upgrade the stock to Accumulate from with a target price of Rs.153.

Hindustan Zinc 2QFY2012 performance highlights and results update

For 2QFY2012, Hindustan Zinc’s (HZL) net revenue at Rs.2,593cr was in-line with our estimate of Rs.2,643cr, while adjusted PAT at Rs.1,369cr was above our estimate of Rs.1,265cr. We recommend Accumulate on the stock. For 2QFY2012, HZL’s net revenue increased by 19.9% yoy to Rs.2,593cr on account of higher sales volume and realization. Zinc, lead and silver sales volumes grew by 5.0%, 1.6% and 12.4% yoy to 184kt, 15kt and 41,454kg, respectively. Average zinc, lead and silver realization increased by 7.4%, 14.2% and 96.6% yoy, respectively.Zinc cost of production (excluding royalty) stood at US$847/tonne in 2QFY2012 compared to US$874/tonne in 1QFY2012, reflecting the qoq INR depreciation against the USD.

Indraprasth Gas 2QFY2012 performance highlights and results update

Indraprasth Gas (IGL) reported robust top-line growth of 34.0% yoy in 2QFY2012. However, the company’s EBITDA and PAT grew by only 27.4% yoy and 17.8% yoy on account of higher RLNG and interest costs. We maintain our Neutral view on the stock. Net sales growth of 34.0% yoy to Rs.597cr was driven by higher sales and realization. CNG and PNG volumes increased by 14.4% and 62.2% yoy, respectively. Average CNG realisation increased by 8.5% yoy to Rs.29.6/kg. Average PNG realisation increased by 45.5% yoy to Rs.20.4/scm. OPM contracts: Raw-material costs increased by 40.7% yoy to Rs.358cr, mainly on account of higher RLNG costs. Hence, despite higher growth in net sales, EBITDA grew only by 27.4% yoy to Rs.158cr in 2QFY2012. EBITDA margin slipped by 136bp yoy to 26.4% in 2QFY2012.

Infotech Enterprises 2QFY2012 performance highlights and results update

HDFC Bank 2QFY2012 performance highlights and results update

For 2QFY2012, HDFC Bank reported healthy 31.5% yoy growth in net profit to Rs.1,199cr, inline with our as well as street estimates. Moderate NIM compression coupled with largely stable asset quality was the key highlight of the results. We maintain our Accumulate recommendation on the stock.Adjusting for the short-term one-off wholesale loans, gross advances growth moderated a bit to 25.6% yoy. Deposits accretion picked up to 18.1% yoy, primarily driven by rise in fixed deposits (which have accounted for 71.1% of the incremental deposits over the last one year), while moderation in CASA growth to 10.3% led to a decline in CASA ratio to 47.3% from 49.1% in 1QFY2012. The bank was able to restrict the reported NIM  compression to a marginal 10bp qoq at 4.1% in spite of the sharp rise in FD interest rates and the migration of CASA balances to FDs.

Hero MotoCorp 2QFY2012 performance highlights and results update

Hero MotoCorp’s (HMCL) 2QFY2012 results surprised positively on the bottom-line front on account of better-than-expected operating margin. Strong top-line growth of 28.1% yoy (2.6% qoq) was on expected lines, driven by 20.1%  (1% qoq) and 6.8% yoy (1.6% qoq) growth in total volumes and net average realization, respectively. We maintain our volume estimates at 6.1mn/6.8mn for FY2012E/FY2013E; however, our earnings estimates are marginally revised as we expect slight improvement in operating margins going ahead. We maintain our Neutral view on the stock.

HCL Tech 1QFY2012 performance highlights and results update

For 1QFY2012, HCL Technologies (HCL Tech) reported lower-than-expected results. Volume growth during the quarter was modest at 5.1% qoq. The company signed 12 transformational deals during the quarter. Management has indicated that deal bookings will be higher in 4QCY2011 as compared to 9MCY2011, which is indicated by TPI data – according to which ~US$8bn of restructuring deals are coming for renewals in OND2011. HCL Tech has been a beneficiary of the return in demand for enterprise services, and we expect it to ride on spending on discretionary services. We maintain our Buy rating on the stock.

CRISIL 2QFY2012 performance highlights and results update

For 3QCY2011, CRISIL’s top line reported 38.3% yoy growth to Rs.220cr, led by strong growth in its research segment, which witnessed 48.0% growth because of addition of Pipal’s revenue for the full quarter and strong revenue growth in Irevna and CRISIL Research. The rating segment also picked up during the quarter, registering modest 14.8% yoy growth. The advisory segment also witnessed an increase in its revenue, registering 44.3% yoy growth. The company’s EBITDA margin increased by 281bp yoy, largely due to lower employee cost, which declined to 40.5% of sales from 42.8% of sales. Net profit came in at Rs.60cr, down 20.2% yoy. However, adjusting for other income, net profit increased by 74.5%. Other income declined by 88.1% to Rs.5.3cr compared to Rs.44cr in 3QCY2011.

Petronet LNG 2QFY2012 performance highlights and results update

Petronet LNG’s (PLNG) 2QFY2012 net sales increased by 75.5% yoy to Rs.5,367cr on the back of higher volumes and improved realization. Net profit increased by 98.5% yoy to Rs.260cr. We maintain our Neutral view on the stock. PLNG’s R-LNG increased by 35.1% yoy to 135TBTU mainly due to increased spot and contracted volumes. Contractual volumes stood at 91TBTUs and spot volumes stood at 44TBTUs. The company’s utilization stood at 106% at its Dahej terminal in 2QFY2012. Also, average realization improved by 29.7% yoy to Rs.397/mmbtu. On account of these, PLNG’s net sales grew by 75.5% yoy to Rs.5,367cr.

MindTree 2QFY2012 performance highlights and results update

MindTree reported a strong performance for 2QFY2012, with numbers ahead of street as well as our expectations on all fronts. The company reported volume growth of 6.1% qoq along with a 3.5% qoq increase in price realization. MindTree has been one of the good performers on the revenue growth front in the Indian IT mid-cap space, growing by a CQGR of 5.6% over the last six quarters. We expect MindTree to continue its growth momentum at a 17.9% CAGR in USD revenue over FY2011-13E. We recommend Buy on the stock.For 2QFY2012, MindTree reported USD revenue of US$101.3mn, up 9.5% qoq.

Persistent Systems 2QFY2012 performance highlights and results update

For 2QFY2012, Persistent Systems (Persistent) reported numbers that were almost in-line with our as well as street expectations on the revenue front; however, it outperformed the street as well as our expectations on the operating and profitability front. Though management has maintained its PAT guidance for FY2012 of having it at least flat yoy despite the surge in tax rates to 31% from 7% in FY2011, but its commentary has turned highly cautious. Persistent is into pure-play offshore product development (OPD), which is highly discretionary in nature and, thus, poses a huge risk for the company if any slowdown kicks in the economies. We recommend Neutral on the stock.

TCS 2QFY2012 performance highlights and results update

For 2QFY2012, TCS reported modest set of numbers, lower than street’s expectations on the revenue front; however, the company outperformed on the operating front. The major highlight of the result was the 6.25% qoq volume  growth and addition of two new clients in the US$100mn plus revenue bracket.Management has highlighted robust growth outlook for FY2012, with the deal pipeline being strong. TCS continues to remain our preferred pick along with HCL Tech in the IT pack. We recommend Accumulate on the stock.

BHP (BHP) report: Iron ore, metallurgical coal and manganese update

In FY11, roughly half of BHP’s underlying earnings (EBIT) came from its steelmaking resources – iron ore, metallurgical coal and manganese. The proportion is not really important but the future growth of this sub-group certainly is to BHP’s plans to expand its global tier one resource base over the next 20-30 years. “What makes BHP so confident in the demand for steel-making raw materials that it is prepared to spend more than US$33 billion on growth projects in these businesses?” The expansion is supported by a current resource base of 19.3 billion tonnes of ore, which itself has expanded by 141% in the last five years. Current measured reserves of iron ore are 3.5 billion tonnes.

Bajaj Finance Ltd Q2 FY12 results update by Nirmal Bang

Bajaj Finance (BFL) reported net profit of Rs 87.37 crs (66% yoy) in Q2FY12 in line with expectations. Loan losses and provisions for Q2FY12 declined 33% at Rs 41 crs including Rs 5.38 crs of additional provision. Disbursements sustained the strong uptrend, rising by 58% yoy. Asset quality remained good with Gross NPAs declining by 50 bps qoq to 1.6% and Net NPAs declining by 13 bps qoq to 0.33%.Net Interest Income increased 31.2% YoY and 3.7% QoQ to Rs 284 crs in Q2FY12 resulting from strong growth in disbursements (57.5% YoY). BFL enjoys the pricing power in consumer durable segment which has helped it to sustain growth in its NIIs.

Torrent Pharmaceuticals Ltd Q2 FY12 results update by Nirmal Bang

Torrent Pharmaceuticals Limited reported total income of Rs 683.3 cr for Q2FY12, a growth of 17.5% yoy and 5.5% qoq. Net profit increased by 31.2% yoy at Rs 100 cr.EBITDA margins have jumped to 20.6% in Q2FY12 as compared to 20.2% in Q2FY11. EBITDA margins got supplemented by one time licensing income of Rs 10 crs  and net forex gain of Rs 7 crs. Management expects dossier income flow to continue for remaining quarters of FY12.

Yes Bank Q2 FY12 results update by Nirmal Bang

Yes Bank’s performance for Q2FY12 was marginally above our estimates. The bank reported a net profit of Rs.235 crs in Q2FY12 resulting in a growth of 33.3% on a YoY basis and a QoQ increase of 8.8%. The bank's CASA deposits stood at 11.0% in Q2FY12, up from 10.1% in Q2FY11.Yes Bank loan book grew at 12.7% YoY and 3.3% on a QoQ basis in Q2FY12. Net Interest Margin (NIM) stood at 2.9% in Q2FY12, as compared to 2.8% in Q1FY12 and 3.0% in Q2FY11. Management expects the bank’s advances to grow in excess of 25% for FY12E.

ING Vysya Bank Q2 FY12 results update by Nirmal Bang

ING VYSYA bank (IVBL) results were above expectations. Net profit of the bank in Q2FY12 increased 22.8% QoQ and 53.4% YoY at Rs 115.5 crs on account of lower provisioning. Net interest income increased both on YoY and QoQ basis. The bank?fs asset quality has improved and the bank reported overall decline in its gross and net NPAs.Net Interest Income increased by 19.4% on YoY basis and 15.9% QoQ in Q2FY12 to Rs. 304 crs primarily due to the repricing done in the advances portfolio and capital infusion in end Q1 FY12. Management indicated that NIMs for FY12 will remain broadly in the range of 3.15%?] 3.25%.

South Indian Bank 2QFY2012 performance highlights and results update

For 2QFY2012, South Indian Bank (SIB) reported healthy net profit growth of 24.4% yoy (15.1% qoq) to Rs.95cr, better than our (Rs.83cr) and street estimates (Rs.88cr). NIM expansion coupled with lower slippages was the key highlight of the results. We maintain our Accumulate recommendation on the stock.During 2QFY2012, the bank’s business growth moderated in-line with overall industry trends; however, it remained comfortably ahead of the industry. Advances grew by 3.9% qoq vis-?-vis marginal 0.2% growth for the industry (up to September 23, 2011).

HDFC 2QFY2012 performance highlights and results update

For 2QFY2012, HDFC’s standalone net profit grew by healthy 20.2% yoy (up 14.9% qoq). Asset quality continued to be stable, although spreads for 1HFY2012 witnessed a marginal decline. We recommend Neutral on the stock.For 2QFY2012, HDFC’s loan book grew by healthy 19.5% yoy and 2.3% qoq to Rs.126,992cr. Approvals in 2QFY2012 stood at Rs.24,426cr (up 18% yoy), while disbursements stood at Rs.20,825cr (up 19.0% yoy). HDFC’s asset quality continued to be stable during 2QFY2012, with gross NPA ratio falling by 4bp yoy to 0.82%. During 2QFY2012, an amount of Rs.255cr was utilized from the additional reserve to meet the additional provisions consequent to changes in provisioning norms mainly on standard assets (0.4% standard provisioning required on housing loans as well).

Reliance Industries 2QFY2012 performance highlights and results update

For 2QFY2012, Reliance Industries (RIL) reported 36.7% yoy growth in its bottom line due to strong growth in earnings from refining and petrochemical margins. PAT growth was restricted to 15.8% yoy because of the dip in production from the KG-D6 field. We maintain our Buy recommendation on the stock.RIL’s net sales grew by 36.7% yoy to Rs.78,569cr in 2QFY2012, slightly below our estimate of Rs.81,603cr. Net sales growth was mainly driven by growth in the petrochemicals segment (up 39.5% yoy to Rs.21,066cr) and the refining segment (up 37.1% yoy to Rs.68,096cr). During 2QFY2012, production from KG-D6 stood at 2.7mn bbl (down 42.1% yoy) of crude oil and 303.4bcf (down 20.3% yoy) of natural gas. RIL’s gross refining margin (GRM) stood at US$10.1/bbl in 2QFY2012 (compared to US$7.9/bbl in 2QFY2011).

NIIT report: Value unlocked

NIIT has sold Element K, its US subsidiary, to SkillSoft Corporation (SkillSoft) for US$110mn in an all-cash deal. The company also announced its entry into a strategic long-term services and licensing agreement with SkillSoft. Element K was part of NIIT’s corporate learning solution (CLS) business.Element K was operating in the areas of online products for corporates and e-learning libraries. NIIT had acquired Element K in August 2006 for a consideration of US$35mn. In FY2006, Element K had reported net revenue of US$66mn, with EBITDA margin of ~5%, and was loss making at the PAT level. Element K contributed US$85mn to NIIT’s net revenue in FY2011 (~30% of NIIT’s overall revenue) with EBITDA margin of ~8.1%, implying a revenue CAGR of ~5% over FY2006-11.

Pennar Industries Ltd. Q2 FY12 results update by Nirmal Bang

The company reported a Net Sales of Rs. 294.94 crores in Q2FY12 as compared to Rs. 273.69 crores in Q2FY11, which is up by 7.8%; whereas; it was down by 8.2% as compared to Q1FY12 of Rs. 321.29 crores. The YoY Net Sales growth was driven primarily by the Pre- Engineered Buildings (PEBS) segment. PEBS contributed to 19.3% of consolidated Net Sales in Q2 FY2012 up from 12.2% in Q2 FY2011. Consolidated sales volumes remained relatively flat at 43,600 MT, as compared to last quarter.

Persistent Systems Ltd. Q2 FY12 results update by Nirmal Bang

PSL has grown better than expected during the first half of FY12E. While one off items and forex gain has aided to PSL’s earnings, we believe the company’s second half performance depends upon how sound its IP investments pays-off in the coming quarters. We revise our earnings estimate by 6.5% upwards to 136.7 crores for FY12E, thus an EPS estimate of Rs.34.2 for FY12E (flat YoY). We had recommended PSL at Rs314 in the month of Sep’ 11. We maintain Buy with our earlier target price of Rs.387 which has a upside of 20% from current levels. At CMP, the stock is trading at 9.5x and 8.1x for FY12E and FY13E respectively.

Infosys 2QFY2012 performance highlights and results update

For 2QFY2012, Infosys reported results that were in-line with our as well as street’s expectations on the revenue front; however, the company exceeded expectations on the margin and bottom-line fronts. The company has guided for US$1,802mn–1,840mn revenue for 3QFY2012, which implies growth of 3.2–5.4% qoq. Revenue growth guidance for FY2012 was changed to 17.1-19.1% yoy from 18–20% yoy growth due to cross-currency movement; however, on the positive side, the company has increased its USD EPS guidance for FY2012 by 4.5% to US$3.02–3.06. We recommend Accumulate on the stock.

Development Credit Bank Q2 FY12 results update by Nirmal Bang

Development Credit Bank (DCB)?fs performance for Q2FY12 was broadly in line with our estimates. DCB reported a net profit of Rs.13.2 crs in Q2FY12 resulting in a growth of 177.6% on a YoY basis and a QoQ increase of 51.0%. The bank?fs asset quality has improved and the bank reported overall decline in its gross and net NPAs. The bank's CASA deposits stood at 33.2% in Q2FY12, down from 33.3% in Q1FY12 and 34.6% in Q2FY11.Net Interest Income increased by 27.4% on a YoY basis and 13.9% on a sequential basis in Q2FY12 to Rs 59 crs resulting from the increase in base rate. Net Interest Margin (NIM) of the bank improved sequentially to 3.41% in Q2FY12 from 3.1% in Q1FY12.

Newmont (NEM) report: There is value in this senior, with a dash of growth

Newmont ranks in the top tier of senior gold producers with over 5 million ounces of gold production per annum and a global portfolio of assets. The company’s target is to expand production to 7 million ounces by 2017. Our view is that longer term holders will benefit from the closing of a lag between gold producers’ value now and the price of gold, when investors get more comfort that high prices for gold will be around for some time yet.We view the recent pullback in gold to be a blow off of some froth, and merely a correction to the trend of rising gold prices. Core elements of demand for gold such as jewellery and some industrial uses will ebb and flow; however the bull market is being driven by increased levels of investment demand.

Ineos ABS India review and analysis by Angel Broking

Ineos ABS India (INEOS), an 83% subsidiary of Ineos Global Group, is India's leading manufacturer of an engineering plastic named acrylonitrile butadiene styrene (ABS). On the back of capacity expansion and product development, the top line of the company is expected to grow at a CAGR of 19% during CY2010-12E. The business of the company is to be transferred to ‘Styrolution’, a 50/50 JV between BASF and INEOS and as specified in the company release on BSE, ‘an indirect change in control of INEOS ABS India Limited is expected’, which may trigger an ‘Open Offer’ in the next one year, in our view. The stock is attractive at 12.7x PE and 0.9x EV/Sales for CY2012E. We recommend Buy on INEOS ABS India with a target price of Rs.702, based on a target P/E of 16x and implied EV/Sales of 1.1x for CY2012E.

Bharti Airtel report: Concerns due to currency volatility

The INR has depreciated strongly against the USD by 11% over the past quarter, from 44.6 to 49.6. This steep movement in INR over a month’s time has led to companies, such as Bharti Airtel (Bharti), which have a high exposure to foreign currency in the form of long-term loans, put a risk their profitability. Thus, to gauge the impact of depreciated INR, we have done an impact analysis.As of 1QFY2012, Bharti had foreign currency denominated loans worth ~US$11.8bn (including the current liabilities part of borrowing). Assuming USD/INR rate to remain at Rs.50, we estimate the gross loan will increase by ~Rs.6500cr due to INR depreciation against USD from Rs.44.6 to Rs.50.

TVS Srichakra Ltd. review and analysis by Angel Broking

TVS Srichakra Ltd. (TVSSL), a part of TVS Group, is a leading manufacturer of two and three-wheeler tyres with a 25% market share. Two-wheeler demand growth (~16% yoy YTD) continues to be insulated from the current slowdown in the  automobile sector. Given this growth and increased installed capacity of automotive tyres by 170% to 3.3cr units over FY2009-11, TVSSL’s volume is expected to grow at a CAGR of 11% over FY2011-13E. Also, the promoters have increased their stake in the company from 39.5% in June 2007 to 44.4% in June 2011, demonstrating their confidence in the company’s future growth outlook. We recommend Buy on TVSSL with a target price of Rs.468, based on a target PE of 5x for FY2013E.

Allahabad Bank review and analysis by Nirmal Bang

The share price of Allahabad Bank has corrected by ~40% from it’s 52 week high levels of Rs.271 its FY’11 book value level of Rs.160. This correction in the share price has made the valuations very attractive.The Bank has continuously kept on increasing its dividend ratio barring FY’09, the year of global financial crisis. The dividend per share has doubled from Rs.3 in FY’07 to Rs.6 in FY’11, registering a CAGR of 19%. Considering the increase in the latest quarterly earnings, we expect the Bank to declare a dividend of Rs.7 for FY’12E and Rs.7.5 for FY’13E. At the present price, the stock trades at an attractive dividend yield of 4.4%.

Indo Thai Securities Ltd. IPO review and analysis by Keynote Capitals

Indo Thai Securities Ltd. (ITSL) was incorporated as a public limited company in January 1995 when it commenced its business by obtaining corporate membership of NSE and received SEBI registration. ITSL provides various financial services that are well diversified from trading services in equity, derivatives commodities segment and currency derivatives. The company has also started Mutual Fund Service System (MFSS) & Interest Rate Futures from the NSE to provide full options of trading under single roof.

Godrej Industries review and analysis by Nirmal Bang

Godrej Industries Limited (Godrej Industries) is basically a holding company with investments in major listed companies of the Godrej group, including names like Godrej Consumer ( ~21% stake) and Godrej Properties (~70% stake). The company has significant investment in other unlisted entities also.Considering the fact that Godrej Consumer Products Limited (GCPL) derives a significant portion of its revenues from the rural segment while Godrej Properties Limited(Godrej Properties) derives a significant portion of revenues from the urban segment, the company has effectively struck the balance between the rural and the urban growth avenues.

Mahindra & Mahindra Financial Services Ltd. review and analysis by Nirmal Bang

Incorporated as Maxi Motors Financial Services Limited, Mahindra & Mahindra Financial Services Limited (MMFSL) has a pan-India presence mainly in the rural and semi-urban areas. The company offers an entire gamut of financial services in the rural and semiurban segments.Excellent understanding of rural markets: The main market for tractors being the rural and semi-urban areas, the company has not only gathered an excellent understanding of the rural markets but also established a nation-wide network of 559 branches (as on June 30, 2011) spread across 24 states and 4 union territories.

Taksheel Solutions Ltd. IPO review and analysis by Keynote Capitals

Taksheel Solutions Ltd. (TSL), incorporated in September 1999 is engaged in the business of providing Information Technology services to wealth management service providers. TSL is a 100% EOU and ISO 9001: 2008 certified company. TCL is headquartered in Hyderabad, with an office in North America and provide professional IT services to global clients. TSL’s 11 years of presence in the industry has given the company good business domain knowledge and experience in deploying services & solutions.The Indian IT-BPO sector has become the country’s premier growth engine, crossing significant milestones in terms of revenue growth, employment generation and value creation.

Flexituff International Ltd. IPO review and analysis by Keynote Capitals

Flexituff International Ltd. (FIL) was originally constituted as a partnership firm in January 1966 and was converted into a public limited company with the name “Flexituff International Ltd.” in April 2003. FIL is into manufacturing of FIBC, Geo-Textile Fabric and Ground Cover, Reverse Printed BOPP Woven Bags, Special PP Bags including Leno Bags.Despite global competition, the Indian plastics industry is expanding. The per capita consumption of polymers in India is 4 kgs p.a. against 90 kgs p.a. in the US, 60 kgs p.a. in the Europe and a global average of 17 kgs p.a.

M And B Switchgears Ltd. IPO review and analysis by Keynote Capitals

 M And B Switchgears Ltd. (MBSL) was incorporated in June 1999 is engaged in the manufacturing and distribution of transformers including power transformers, furnace transformers, rectifier transformers and special purpose transformers having two manufacturing units both situated at Indore. The company has the ISO 9001:2008 and ISO14001:2004 certifications.MBSL started with a capacity to manufacture 550 transformers p.a. and have grown gradually to a capacity to manufacture 5,109 transformers p.a. The company’s existing annual production capacity in terms of KVA is 75,000 KVA of transformer p.m. on single shift basis. MBSL’s annual aggregate capacity is 9,00,000 KVA p.a.

Onelife Capital Advisors Ltd. IPO review and analysis by Keynote Capitals

Onelife Capital Advisors Ltd. (OCAL) was originally incorporated in August 2007 and commenced investment banking activities and registered itself with SEBI as “Category 1 Merchant Banker” in February 2010.India’s financial services sector has experienced a new pace of growth in the last decades which was unprecedented for the Indian economy. India has a transparent, technology enabled and well regulated capital market.OCAL serves SMEs throughout the course of growth which gradually evolve into larger enterprises thereby enabling the company to offer clients a larger bouquet of services including complex structured products viz. mergers and acquisitions (including cross border), international fund raising and off market capital raising.

Tijaria Polypipes Ltd. IPO review and analysis by Keynote Capitals

Tijaria Polypipes Ltd. (TPL) was incorporated as a partnership firm with the name ?°Tijaria Overseas Vinyl?± in the year 2000 and was subsequently converted into a public limited company in July 2006 based at Jaipur. TPL is an ISO 9001:2000 certified and is into manufacturing of various kinds of high grade plastic based pipes under the brand name of ?°TIJARIA?± and ?°VIKAS?±.TPL is a winner of ?®NATIONAL AWARD©\2008?? for Quality Production (Special Recognition Award) awarded by the Ministry of Micro, Small & Medium Enterprises, Govt. of India. TPL is also a recipient of ?®RASHTRIYA UDYOG RATNA AWARD?? in the Year 2010, by Center for Educational Development Research for excellence in their respective field.

Bajaj Electricals Ltd. review and analysis by Nirmal Bang

BEL reported a poor performance in Q1FY12 due to the consumer business facing poor market conditions for fan and room cooler (reported a moderate growth of 15.5%) and E&P (Engineering & Projects) business showcased just a meager 2.5% growth coupled with loss on account of increased cost incurred to close down the lingering projects. BEL prices corrected by 14% since Q1FY12 result. We expect BEL performance to improve in Q2FY12E and bounce back to normal level in second half of FY12E on the account of better performance by E&P business and normal growth in consumer durable business.

RDB Rasayans Ltd. IPO review and analysis by Keynote Capitals

RDB Rasayans Ltd. (RDBRL) was incorporated as public limited company in October 1995. RDBRL, an ISO 9001:2008 certified organization, is engaged into manufacturing of PP Tape, PP woven sacks, woven fabrics, industrial woven fabric, PP woven fabrics and PP woven bags and manufacturing facility is located in West Bengal. Packaging industry is largely dependent on the fast moving consumer goods sector. Indian Packaging industry with a growth of more than 15% p.a. accounts for $14Bn.

Prakash Constrowell Ltd. IPO review and analysis by Keynote Capitals

Prakash Constrowell Ltd. (PCL) was incorporated in January 1996 is a fast growing company that provides integrated engineering, procurement and construction services. Construction as a percentage of GDP has been in the range of 7.9%-8.1% in the past six years. Development of infrastructure in the country mainly depends upon the spending by GoI in various sub-segments of infrastructure. GoI has set an ambitious target to increase the proportion of the investment in the infrastructure sector to 9% of GDP by the end of FY12.PCL is a construction company predominantly engaged in the business of infrastructure development and civil construction and undertakes projects for various Government / semi-government bodies and other private sector clients.

Sterlite Technologies Ltd review and analysis by Nirmal Bang

Sterlite Technologies Ltd (STL) is India’s only fully integrated optical fiber manufacturer and the fifth-largest globally. The company is also the third-largest global manufacturer of power conductors and is a leader in the local market with 25% market share.The company has embarked on a capacity expansion for its power conductors and optical fiber business units. In the power conductor segment, it has increased capacity from 75000 Mtpa in FY07 to 160000 Mtpa in FY10 and is further expanding to 200000 Mtpa by FY12.

Metals & Mining report: Mining ban extended in Karnataka

Supreme Court (SC) extends mining ban to Tumkur and Chitradurga districts: The Central Empowered Committee (CEC) had found that iron ore miners resorted to illegal mining activity in Chitradurga and Tumkur districts of Karnataka resulting in environmental damage and loss of forest cover. As per CEC, the level of illegal mining and the consequential environmental degradation in these two districts were similar to that in Bellary district. Thus, based on the CEC’s suggestions, the SC has extended the ban to Tumkur and Chitradurga districts.

Mphasis 3QFY2011 performance highlights and results update

Mphasis reported dismal set of 3QFY2011 results with volume growth of 3.0% qoq - out of which only 1.3% is from normal operations, the rest 1.7% is derived due to several one-off items booked in revenue. At the CMP, the stock is trading at 10.9x FY2013E EPS of Rs.36.4 with a strong cash position of Rs.2,029cr, which warrants limited downside. We recommend an Accumulate rating on the stock.Mphasis reported revenue of US$290mn, up merely 2.9% qoq. In rupee terms also revenue growth was 2.9% qoq with revenues at Rs.1,294cr. These revenues include one-time revenues of Rs.66.5cr. Also, Rs.34.6cr of revenues were not booked in this quarter due to incomplete documentation.

MM Forgings Ltd. Q1 FY12 results update by Nirmal Bang

MMFL manufactures carbon, alloy, micro alloy and steel forgings with product range including forging pieces weighing between 15-60 kgs. The company caters to the automotive, earth moving, engineering and oil industries. The company’s facilities are located at Singampunari, Viralimalia, Guindy and Karan in Chennai. The company’s capacity as of now stands at approximately 75%.MM Forgings Limited’s (MMFL) reported net sales of Rs. 81.2 crs in Q1 FY12 , up 5.3% QoQ and 41.5% YoY mainly driven by volume growth.