Recommendations

Tech Mahindra 3QFY2012 performance highlights and results update

For 3QFY2012, Tech Mahindra reported subdued performance with revenue as well as profit coming in below ours as well as street’s expectations. BT business was a major growth dampener, USD revenue of which declined by 7.8% qoq. Growth came from non-BT business yet again, which grew by 0.6% qoq. BT has started retendering its work; this poses risk to Tech Mahindra’s revenue run rate. However, due to the company’s stake in Mahindra Satyam, we maintain our Accumulate rating on the stock.

United Bank of India 3QFY2012 performance highlights and results update

For 3QFY2012, United Bank of India (UBI) registered a strong set of numbers. The company’s net profit grew by 38.5% yoy to Rs.226cr, which was significantly above our estimate due to higher margin expansion and lower provisioning than estimated by us. We recommend Accumulate on the stock.

BHFC 3QFY2012 performance highlights and results update

BHFC reported in-line 21.1% yoy (3.4% qoq) growth in its standalone revenue to Rs.941cr, driven by the strength of its exports segment, which grew by 29.2% yoy (7.6% qoq). Strong growth in the CV segment in the U.S. and Europe continued to drive exports revenue, which grew by 35% and 27.3% yoy in the U.S. and Europe, respectively. Volumes in tonnage terms increased by 15.2% yoy (3.1% qoq) to 55,412MT and net average realization jumped by 6% yoy (1.5% qoq).

JK Lakshmi Cement 3QFY2012 performance highlights and results update

JK Lakshmi Cement (JKLC) reported an impressive performance for 3QFY2012. The company’s bottom line came in at Rs.49cr as against Rs.4.6cr in 3QFY2011. Bottom-line growth was driven by strong 26.3% growth in realization, reduction in raw-material and power and fuel costs on per tonne basis and 59.2% growth in other income to Rs.14.8cr. We recommend a Buy on the stock.

ONGC 3QFY2012 performance highlights and results update

For 3QFY2012, ONGC’s EBITDA and adjusted PAT decreased by 18.3% yoy and 49.2% yoy on account of higher subsidy burden. We recommend Accumulate on the stock. ONGC’s top line decreased by 2.5% yoy to Rs.18,124cr. The company’s crude oil net realization declined by 30.9% yoy to US$44.8/bbl on account of higher subsidy burden. The company shared a subsidy burden of Rs.12,536cr in 3QFY2012 vs. Rs.4,222cr of subsidy shared in 3QFY2011 and Rs.5,713cr in 2QFY2012.

Bharti Airtel 3QFY2012 performance highlights and results update

Bharti Airtel (Bharti) reported a mixed performance for 3QFY2012, with revenue coming in-line with our as well as street expectations. The company, however, disappointed on the operating and profitability fronts due to higher depreciation and amortization expenses. Also, minutes of usage (MOU) of mobile – India as well as Africa business declined by 1.0% and 2.5% qoq to 419min and 125min, respectively. We maintain our Neutral view on the stock.

Siyaram Silk Mills 3QFY2012 performance highlights and results update

For 3QFY2012, Siyaram Silk Mills (SSM) reported a weak performance. The company’s net sales declined by 9.2% qoq and 2.6% yoy to Rs.222cr. OPM expanded by 9bp yoy to 13.2%. Net profit witnessed a 17.0% yoy decline to Rs.13cr. We continue to maintain our Buy view on the stock.

Dena Bank 3QFY2012 performance highlights and results update

For 3QFY2012, Dena Bank registered healthy 20.3% yoy growth to Rs.187cr, above our estimates due to higher margin expansion and lower provisioning expenses than estimated by us. We recommend Buy on the stock. The pace of business picked up in 3QFY2012, with advances growing by 12.2% qoq (up 15.7% yoy) and deposits growing by 6.4% qoq (13.0% yoy). CASA deposits growth was relatively slower at 4.2% qoq (11.4% yoy), leading to a 72bp qoq (50bp yoy) decline in CASA ratio to 34.9%.

Mahindra and Mahindra 3QFY2012 performance highlights and results update

Mahindra and Mahindra (MM) reported mixed results for 3QFY2012. The company registered better-than-expected top-line growth, led by robust volume growth. However, net profit was below our estimates on account of margin contraction due to higher purchases from its manufacturing subsidiary, Mahindra Vehicle Manufacturers Limited (MVML). We have lowered our earnings estimates for FY2012/13 by 6.8%/7% to factor in lower tractor volumes (8% growth in FY2013E from 12% earlier) and higher purchases from MVML.

Cadila Healthcare 3QFY2012 performance highlights and results update

Cadila Healthcare (Cadila) reported lower-than-expected numbers for 3QFY2012, except on the sales front. The company’s sales for the quarter were mostly in-line at ~Rs.1,352cr. However, higher R&D expense during the quarter resulted in depression in the operating margin, which came in at 17.1%. This coupled with forex losses during the quarter resulted in higher dip in net profit during the quarter. The stock is trading at 20.1x FY2012E and 15.6x FY2013E earnings. We recommend Buy on the stock.

IL&FS Transportation Networks 3QFY2012 performance highlights and results update

For 3QFY2012, on a consolidated basis, IL&FS Transportation Networks (ITNL) posted a good set of numbers, though below our expectations. The company reported strong growth on the top-line front; however, the fall in EBITDAM and high interest cost prevented top-line growth to flow to the bottom-line level. On account of 3QFY2012 performance, we are tweaking our FY2012 estimates and toll collection revenue numbers for operational BOT projects. Owing to the recent run-up in the stock price, we recommend Accumulate on the stock.

SpiceJet 3QFY2012 performance highlights and results update

For 3QFY2012, SpiceJet’s net sales grew by 41.6% yoy to Rs.1,176cr. EBITDA margin came in at negative 1.6%. At the EBITDA level, the company witnessed loss of Rs.19cr. Consequently, the company reported net loss of Rs.39cr during the quarter. We remain Neutral on the stock. For 3QFY2012, SpiceJet reported strong top-line growth of 41.6% yoy on the back of capacity additions during the year.

LIC Housing 3QFY2012 performance highlights and results update

For 3QFY2012, LIC Housing posted net profit growth of 43.2% yoy to Rs.306cr, above our estimates mostly due to reversal of excess provisions (~Rs.100cr) that the company was carrying on its balance sheet. We recommend an Accumulate rating on the stock.  For 3QFY2012, LICHF’s loan book grew strongly by 26.6% yoy (4.7% qoq) to Rs.58,707cr. Loan growth was driven by loans to the individual segment, which grew by 32.9% yoy to Rs.55,171cr, while loans to the developer segment declined by 27.2% yoy to Rs.3,536cr (6.0% of overall loan book).

MOIL 3QFY2012 performance highlights and results update

For 3QFY2012, MOIL’s net sales and EBITDA decreased by 5.4% and 31.9% yoy, respectively, mainly due to a steep decline in manganese ore prices. We recommend a Reduce rating on the stock. During the quarter, MOIL’s net sales decreased by 5.4% yoy to Rs.240cr (slightly below our estimate of Rs.248cr) mainly on account of the decrease in average realization (down 20.1% yoy and 1.9% qoq to Rs.7,993/tonne), partially offset by increased sales volume growth (up 19.5% yoy and 5.4% qoq to 285,500 tonnes).

IDBI Bank 3QFY2012 performance highlights and results update

For 3QFY2012, IDBI Bank reported a weak set of numbers, below our estimates on account of higher margin compression and higher-than-estimated provisioning. We recommend a Neutral rating on the stock. The bank’s advances grew by 16.2% yoy, while deposits increased by 17.9% yoy. CASA deposits growth continued to be healthy at 54.1% yoy (4.1% qoq), leading to a 462bp yoy improvement in CASA ratio to 19.7%. However, on a sequential basis, saving account deposits declined by 7.2% qoq due to shift to higher-yielding term deposits.

BGR Energy 3QFY2012 performance highlights and results update

BGR Energy’s (BGR) results were disappointing for 3QFY2012, as expected. The company’s top line for the quarter declined on account of a high base, leading to downbeat earnings growth. Amidst execution concerns, management has guided revenue of ~Rs.3,400cr for FY2012E, which is in a stark contrast to the earlier guidance of Rs.4,800cr and well below our conservative estimates of Rs.4,196cr. Hence, we revise downwards our FY2012E/FY2013E revenue estimates by 20.3%/7.6% and earnings estimates by 18.0%/18.9%.

Dena Bank Q3 FY12 results update by Nirmal Bang

Dena Bank's performance for Q3FY12 was good and broadly in line with expectations with growth in both NII and other income. The bank reported a net profit of Rs 186.7 crs in Q3FY12 resulting in a growth of 20.3% on a YoY basis and a QoQ decline of 3.6%. Although the bank reported comfortable NPA levels, we believe that the banks restructuring book is a cause of concern in the near term.

India Cements 3QFY2012 performance highlights and results update

India Cements (ICEM) reported strong operating performance during 3QFY2012. The company’s bottom line grew by 162.3% yoy to Rs.56cr. Bottom-line growth was largely due to improved cement realization (16.2% yoy to Rs.4,262 per tonne) and higher cement dispatches (6.9% yoy to 2.18mn tonnes), as cement demand in South India showed signs of recovery. We maintain our Neutral view on the stock.

Nagarjuna Construction 3QFY2012 performance highlights and results update

Nagarjuna Construction Company (NCC) posted a poor set of numbers for 3QFY2012, below our and street expectations. Owing to the company’s poor performance in 3QFY2012, we are revising our estimates downwards for FY2012. Further, on account of the recent run-up in the stock price, we recommend Neutral on the stock.

Subros 3QFY2012 performance highlights and results update

Subros (SUBR) reported weak results for 3QFY2012, led by a yoy decline in its volumes and higher interest expense. However, sequentially, higher interest cost and depreciation expense impacted the company’s performance. We expect passenger car demand to improve in FY2013E, led by the likely easing of interest rates, thereby benefitting SUBR. We recommend Accumulate on the stock.

Madras Cements 3QFY2012 performance highlights and results update

For 3QFY2012, Madras Cements (MC) posted a strong performance, with net profit surging by 76.7% yoy to Rs.77cr. Strong bottom-line performance was on account of both 19.1% yoy growth in dispatches (though on a lower base) and 8.6% yoy growth in realization. We remain Neutral on the stock.

Finolex Cables 3QFY2012 performance highlights and results update

For 3QFY2012, Finolex Cables (Finolex) reported a 2.6% yoy decline in its top line to Rs.499cr. The company’s operating profit declined by 18.8% yoy to Rs.41cr. OPM declined by 165bp yoy but improved by 29bp qoq to 8.3%. PAT came in at Rs.14cr, down 47.7% yoy and 30.6% qoq. Going ahead, the business outlook remains positive, given the growth prospects in user industries and higher sales from the high-tension (HT) cables plant.

Sadbhav Engineering 3QFY2012 performance highlights and results update

For 3QFY2012, Sadbhav Engineering (SEL) reported another set of strong numbers, marginally ahead of our expectations (highest on street) and way ahead of street estimates. Order inflow for 9MFY2012 stood at Rs.742cr, order book remained decent at Rs.5,940cr (2.7x FY2011 revenue). We are revising our toll  collection estimates for Ahmedabad Ring Road and Aurangabad Jalna projects. Also, we are factoring in lower interest cost for FY2013E as per management’s guidance.

Bajaj Electricals Q3 FY12 results update by Nirmal Bang

Bajaj Electricals has reported a dismal performance where the EBIDTA margin was down by 210bps YoY to 8.2% in Q3FY12 as against 10.3% in Q3FY11 led by the slump in Engineer & Project division (E&P) which reported a decline in margins by 580bps YoY to the tune of 3.6% in Q3FY12. The company reported a jump in net revenue by 15% YoY and by 13.5% QoQ to Rs. 792.86 crores.

Dr. Reddy’s Laboratories 3QFY2012 performance highlights and results update

Dr. Reddy’s Laboratories (DRL) reported higher-than-expected 3QFY2012 results. Net sales increased by 45.9% yoy, led by 57% yoy and 12% yoy growth across the global generics and proprietary products businesses, respectively. This aided an expansion of the operating margins and subsequently a higher net profit growth during the period. Management has reinforced its FY2013 guidance of US$2.7bn, with RoCE expected to come in at 25%. We maintain our Buy rating on the stock.

Ashok Leyland 3QFY2012 performance highlights and results update

Ashok Leyland’s (AL) 3QFY2012 results were significantly below our (as well as consensus) estimates at the EBITDA and net profit level led by steep increase in other expenditure and higher employee costs. Further increasing contribution from the recently launched Dost vehicles too impacted net average realization and hence profitability.

Rallis India 3QFY2012 performance highlights and results update

For 3QFY2012, Rallis India (RAIL) reported 18.6% growth in its net sales. However, net profit growth declined by almost 78% yoy. However, adjusted for the extra-ordinary the net profit declined by 23% yoy. The disappointment mainly came on the OPM front, which declined by almost by 10.4% on yoy. We expect RAIL to register a CAGR of 19.8% and 21.4% in its net sales and profit over FY2011-13, respectively. We remain Neutral on the stock.

Bhushan Steel 3QFY2012 performance highlights and results update

Bhushan Steel (BSL) net sales increased 23.9% yoy to Rs.2,407cr on account of increase in both realizations and sales volumes. Flat products sales volumes grew by 17.0% yoy to 429,883 tonnes and flat product average realization increased by 27.9% yoy to Rs.47,213/tonne. EBITDA grew 34.7% yoy to Rs.724cr on account of increase in net sales and EBITDA margin expanded 241bp yoy to 30.1%. However, interest expenses grew 124.6% yoy to Rs.229cr and depreciation expenses grew 165.8% yoy to Rs.152cr which resulted in PAT declining by 1.3% yoy to Rs.277cr.

Vinati Organics Q3 FY12 results update by Nirmal Bang

Vinati Organics reported better than expected results for Q3FY12. Sales grew by 16.2% qoq and 34.4% yoy at Rs 118 cr. On back of lower raw material cost and other expenses, EBITDA margin has improved by 718 bps qoq and 193 bps yoy at 24.9%. However, due to higher interest cost, tax and forex loss, PAT margin has declined on yoy basis to 13.6% in Q3FY12 as compared to 16.3% in Q3FY11.

United Phosphorus 3QFY2012 performance highlights and results update

For 3QFY2012, United Phosphorus’s (UPL) revenue grew by 57.4% yoy to Rs.1,872cr and net PAT grew by 36.6% to Rs.113cr. Management has increased its revenue guidance to 35-40% for FY2012 and also reaffirmed its OPM guidance at 19-20%. The stock is quoting at attractive valuations of 8.5x FY2013E EPS and hence, we maintain our Buy rating on the stock.

Greenply Industries 3QFY2012 performance highlights and results update

Greenply Industries (GIL) registered strong top-line growth in 3QFY2012. The company’s net sales grew by 32.1% yoy and 1.2% qoq to Rs.419cr. GIL reported 146bp yoy expansion in OPM to 10.4% mainly due to lower raw material costs. OPM would have expanded further but the company reported forex loss to the tune of Rs.7cr during the quarter. Net profit increased by 96.0% yoy to Rs.14cr.

Hexaware 4QCY2011 performance highlights and results update

For 4QCY2011, Hexaware reported robust set of results. Major highlights of the results were whopping growth of 6.7% qoq revenue growth (highest in the industry) even in a seasonally soft quarter for IT companies. Hexaware has been outperforming in the mid-cap space since six quarters by growing at a scorching 8.1% CQGR over 1QCY2010–4QCY2012. Management has been outperforming its guidance every quarter and has guided for at least 20% yoy revenue growth for CY2012.

ITC 3QFY2012 performance highlights and results update

For 3QFY2012, ITC declared steady growth in its top line and earnings (broadly in-line with our estimates). We recommend Accumulate on the stock. During the quarter, ITC declared top-line growth of 14.2% yoy to Rs.6,195cr (Rs.5,424cr), marginally below our estimates. The cigarette division registered 11.0% yoy growth in gross revenue (16.6% yoy growth in net revenue) on the back of higher value growth in cigarettes. Amongst other segments, at net level, agri-business, paperboards and packaging posted growth of 6.8% yoy, 11.5% yoy respectively, while hotels posted a decline of 1.0% yoy.

Maruti Suzuki Q3 FY12 results update by Nirmal Bang

Maruti reported broadly in�]line results which were impacted due to loss of production. The company had an impact of 40,000 cars in the Q3FY12 (owing to labour strikes), which should normalize in the coming quarters. Net sales increased 1.7% QoQ and declined 17.4% YoY mainly due to loss of production of around 40,000 units due to labour unrest. Further, sluggish market conditions caused by higher fuel prices and interest rates led to lower volumes in the last quarter.

Pennar Industries Q3 FY12 results update by Nirmal Bang

Pennar Industries has reported a dismal consolidated quarter due to heavy engineering division witnessing a slow order inflow for the second straight quarter due to the slower off�]take from the railway segment. According to the management, the scenario is expected to be favorable in FY13E. The Consolidated EBITDA fell by 18.4% YoY to Rs. 31.1 crores and by 16.2% on QoQ basis. The EBIDTA margin fell by 110bps to 11.1% in Q3FY12 as against 12.2% in Q3FY11 and 12.6% in Q2FY12.

Canara Bank 3QFY2012 performance highlights and results update

For 3QFY2012, Canara Bank posted a poor set of results with net profit declining by 20.8% yoy to Rs.876cr. While asset quality improved during the quarter, higher MTM losses on investments and NPV loss on account of restructuring of GTL dented the bottom line. We maintain our Accumulate recommendation on the stock.

PNB 3QFY2012 performance highlights and results update

For 3QFY2012, PNB registered a moderate set of results with net profit growing by 5.5% yoy to Rs.1,150cr, which was below our estimates on account of higher provisioning expenses than estimated by us. We recommend an Accumulate rating on the stock. The bank’s business growth momentum picked up during 3QFY2012. Advances for the bank increased by 5.5% qoq (18.7% yoy).

Jagran Prakashan 3QFY2012 performance highlights and results update

For 3QFY2012, Jagran Prakashan (JPL) reported a healthy performance on the revenue front. The company reported top-line growth of 13.7% yoy/6.5% qoq to Rs.317cr. The company’s earnings declined on a yoy basis by ~21.5% as well as sequentially by ~10% and came in at Rs.41cr. The decline in earnings was due to a 496bp yoy contraction in operating margin on account of high raw-material prices because of increased circulation and forex losses. We maintain our Buy recommendation on the stock.

Dabur 3QFY2012 performance highlights and results update

Dabur reported an impressive performance for 3QFY2012. Top-line growth was strong at 34.5% yoy, above our estimates, driven by a mix of volume and value growth and recent acquisitions. Earnings grew by 11.9% yoy, below our estimates. We maintain our Accumulate recommendation on the stock.

Asian Paints 3QFY2012 performance highlights and results update

For 3QFY2012, Asian Paints (APL) posted a modest performance on the top-line and on the earnings front. The company’s top line grew by 22% yoy to Rs.2,561cr (Rs.2,100 cr), in-line with our estimates. Earnings grew by 16.6% yoy to Rs.257cr (Rs.220cr), above our estimates. Operating profit dipped by 91bp yoy to Rs.397cr (Rs.331cr) due to high raw-material costs and other expenses (up 19bp yoy). We maintain our Neutral view on the stock.