By Angel Broking

The benchmark indices extended losses for the fifth day in a row as telecom stocks tumbled. The indices made a valiant effort towards recovery in the closing hours of trade, but this was to no avail. The market pared its opening gains soon after an initial surge triggered by firm global stocks. The Sensex and the Nifty eventually closed the session with losses of 1.0% and 0.8%, respectively. The BSE Mid-Cap and Small-Cap indices closed with losses of 0.5% and 0.8%,  respectively. Among the front liners, Sterlite, ICICI Bank, Grasim, TataMotors and Maruti Suzuki gained between 2-3%, while Reliance Communications, Bharti Airtel, Reliance Infra, Tata Power and Reliance lost between 4-7%. In the Midcap segment, Shriram City, Apollo Tyre, Tata Chemicals, IndiaBulls Real Estate and KGN India gained between 4-7%, while Renuka Sugar, Bajaj Hindusthan, Astrazeneca Pharma, OnMobile Global and Indian Overseas Bank lost between 5-7%.

Markets Today
The trend deciding level for the day is 4751 / 16021. NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 4814 – 4917 / 16236 - 16576. However, if NIFTY trades below 4751 / 16021 for the first half-an-hour of trade then it may correct up to 4648 – 4585 / 15681 - 15465.

Auto Sales Numbers – October 2009

Maruti Suzuki
Maruti Suzuki India Limited sold a total of 85,415 vehicles in October 2009, growing 32.4 % yoy in the month. This includes 13,864 units of exports. The company had sold a total of 64,490 vehicles in October 2008, including 5,363 for the export markets. The sales in the A2 segment grew by 18.4%, while in the A3 segment the sales growth was 62.7%, as compared to October 2008.

Tata Motors
Tata Motors’ total sales (including exports) of Tata commercial and passenger vehicles in October 2009 were 53,404 vehicles, a growth of 34% over 39,729 vehicles sold in October 2008. The company’s domestic sales figure of Tata commercial and passenger vehicles for October 2009 was 50,552, a 40% growth over the 36,168 sold in October last year. The company’s sales of commercial vehicles in October 2009 in the domestic market were 30,541 nos., a 59% growth compared to 19,154 vehicles sold in October last year. LCV sales were 18,625 nos., a growth of 57% over October last year. M&HCV sales stood at 11,916 nos., a growth of 63% over October last year. The passenger vehicles business reported a total sale and distribution off-take of 22,232 nos. (20,011 Tata + 2,221 Fiat) in the domestic market in October 2009, a 28% increase compared to 17,378 nos. (17,014 Tata + 364 Fiat) in October last year and the highest this fiscal.

Two Wheelers
Hero Honda reported a 3% yoy growth in October 2009 to 354,156 units. Bajaj Auto recorded a 51% yoy growth in Two Wheelers, aided by a 52% yoy growth in the Motorbike segment to 249,681 units. Three wheeler sales of Bajaj Auto recorded a 16% yoy growth to 30,481 units during the month.

BHEL bags Rs5,040cr order

Bharat Heavy Electricals (BHEL) has bagged an order worth Rs5,040cr from Jindal Power for setting up the 2,400 MW (4x600 MW) extension stage of the OP Jindal Super Thermal Power Plant in Chhattisgarh. BHEL’s scope of work in the contract envisages design, engineering, manufacture, supply, erection, testing and commissioning of Boilers, Steam Turbines, Turbo-Generators and associated auxiliaries, along with a state-of-the-art Controls and Instrumentation system, including Generator and Station transformers. We maintain our Neutral view on the stock.

IVRCL Infra plans to restructure – Value Creation?

IVRCL Infra has announced that it might consider transferring its BOT assets (3+2 in road and water) to its listed subsidiary IVR Prime, mainly to leverage its unutilised Net worth and to reap the benefits from large opportunities in the PPP space. For this, the company has sought the services of six major professional agencies (IDFC, Enam Securities, Cushman Fields, Sujal Shaw, E&Y, and VS Raju & Associates) to conduct the valuation exercise for the process. We believe that the transfer would have been better if it was to a 100% subsidiary and for the raising of funds in that company. However, the management has specified that such a method was not conducive in the current markets. Further, the management has said that the transfer would happen on an asset-value basis and not on a market cap basis, which should put to rest, concerns about the valuation of IVR Prime. Thus, we are not concerned about the transfer mechanism.

Moreover, we believe that one of the best things about the deal is that there is no conflict of interest, as the promoters of IVRCL Infra do not have any significant stake in IVR Prime. Therefore, we believe that such kind of a restructuring would be a win-win situation (given that the transfer-pricing is fair), as it would benefit IVR Prime by enabling it to own revenue-generating assets; IVRCL Infra would benefit as its EPC business would get a shot in the arm, as IVR Prime starts aggressively building its asset portfolio. We continue to maintain our positive outlook on IVRCL Infra.

2QFY2010 Results Reviews

Bharti Airtel
Bharti Airtel recorded a 1% qoq de-growth in its Top-line in 2QFY2010 to Rs9,846cr, owing to the significant decline of 9.2% qoq in Mobile revenues per user per month (ARPUs), which stood at Rs254 as on 2QFY2010. The subscriber base was up by 8% qoq and stood at 110.5mn as on 2QFY2010. However, on a yoy basis, the top-line grew by 9.1%, backed by strong growth of 42.6% in the mobile subscriber base, while the ARPUs declined by 23.3% yoy. Bharti recorded a 30bp qoq expansion in EBIDTA Margins during 2QFY2010, with Access Charges declining by 60bp qoq (340bp yoy fall) and employees costs declining by 40bp qoq. On a yoy basis, the margins improved by 105bp. The Net Profit declined by 8% qoq and 13.4% yoy to Rs2,321cr. Currently, we are working on the numbers and the stock is under review.

SAIL
For 2QFY2010, SAIL posted 16.8% yoy decline in Top-line to Rs9,944cr mainly on account of 26.6% decline in average steel realizations. Sales volume grew 13.5% yoy to 2.95mn tonnes. Despite the sharp dip in Realisations, EBITDA Margins declined marginally by 119bp yoy to 24.0% due to absence of provisioning in 2QFY2010 (in 2QY2009, the company had made provision of Rs1,358cr), which resulted in Staff cost declining by a substantial 63.7% yoy. We expect the reduction in Employee cost to continue on account of a) earlier excess provisions and b) reduction in employees. Net Profit exceeded our estimates by 11.1% to Rs1,663cr mainly on account of the improvement in EBITDA Margins and higher Other Income. While we are positive on the stock over the longer term due to a) reduction in Staff costs, b) doubling of capacity over the next 3-5 years and c) ease of funding its Rs60,000cr capex programme through a combination of equity dilution and fresh issuance of debt, we believe that in the near term, threat of Chinese steel exports will exert pressure on steel prices and consequently on the stock price. Therefore, we remain Neutral on the stock.

HUL
HUL declared its 2QFY2010 numbers. For the quarter, HUL reported a muted Top-line growth of 5% yoy to Rs4,228cr (4,028cr) below our expectation of a 10.9% yoy growth to Rs4,449cr. The management indicated that volumes in its core FMCG business grew by 1% yoy. FMCG sales grew by 7% yoy, driven mainly by strong growth in Personal products and Foods. Soaps & Detergents segment grew merely 1% yoy, impacted by low growth in Mass segment. In terms of Earnings, HUL’s recurring Bottom-line delivered a positive surprise, registering a strong growth of 28.7% yoy to Rs563.7cr (Rs437.9cr), significantly ahead of our estimates of an 8.3% yoy growth to Rs474.4cr driven by strong Margin expansion and lower Tax rate. However, reported Earnings posted de-growth of 21.6% yoy to Rs428.5cr (Rs546.6cr), owing to adjustment of exceptional loss of Rs135cr during the quarter (gain of Rs109cr), owing to a provision related to settlement signed with erstwhile workers of a closed unit. At the operating front, HUL Margins expanded by 262bp to 14.4% (11.8%), aided by a 331bp fall in raw material costs and 265bp savings in Other expenditure. However, HUL re-invested Margin gains into higher ad-spends, which increased by 346bp yoy, driven by relaunches and the mixed impact of higher Personal products sales. We maintain a Neutral view on the stock.

Nestle (3QCY2009)
For 3QCY2009, Nestle registered a modest Top-line growth of 17.6% yoy to Rs1,302cr (Rs1,108cr), marginally ahead our estimate of Rs1,315cr, an 18.7% growth. The Topline growth was aided by steady growth in its Net Domestic Sales (up 18% yoy to Rs1,217cr, supported by both volumes and realisation growth). Export Sales also registered a positive growth of 11.2% yoy to Rs75.1cr, aided by improved realisations due to the depreciation of the India Rupee against the US Dollar. The bottom-line (on a reported basis) grew by 38.7% yoy to Rs182.8cr (Rs131.8cr), ahead of our expectation of a 32.4% growth to Rs174.5cr, supported by Margin expansion and a lower Tax Rate (down 403bp yoy). For the quarter, Nestle’s Operating Margins expanded by 158bp to 20.3% (18.7%), driving a robust EBITDA growth of 27.5% yoy to Rs264.2cr (Rs207.2cr), on the back of a favorable product-mix, price hikes and cost-optimisation measures. During CY2008-10E, we expect Nestle to report a CAGR growth of 20.6% in its Top-line, largely owing to a steady growth in its Domestic business, supported by renewed consumer demand across categories, innovative product launches and superior pricing power. However, at the current levels, we believe that the stock leaves little room for an upside, with the possibility of a negative surprise. Hence, we recommend a Neutral view on the stock.

ABB (3QCY2009)
ABB came out with its results for 3QCY2009. The company posted a 4.3% yoy degrowth in its Top-line to Rs1,454cr (Rs1,519cr) for 3QCY2009, on account of the slower-than-expected execution. On the Operating front, the company reported a dip in the quarterly EBITDA Margins by 46bp yoy to 8.4% (8.9%). Consequently, the Net Profit during the quarter fell 20.7% to Rs83cr (Rs105cr). Given the rich valuations, we maintain our Sell recommendation on the stock.

GlaxoSmithKline Pharma
GlaxoSmithKline Pharma (Glaxo) reported its 3QCY2009 results, which were ahead of our estimates. Net Sales came in at Rs511.8cr (Rs457.9cr), as against our estimate of Rs492.7cr. The company reported an OPM of 36.9% (37.0%), which was flat yoy and in-line with our estimates, in spite of Employee expenses rising by 26.4% to Rs56.2cr (Rs44.4cr), which were set-off by lower Raw-material expenses. Glaxo reported a Net Profit of Rs141.1cr (Rs132.0cr) which was up 6.5% and ahead of our estimated Rs136.4cr. For 9MCY2009, the company reported Net Sales of Rs1,426.4cr (Rs1,292.9cr), up 10.3% yoy, and Net profit of Rs409.8cr (Rs367.2cr), up 11.6%.The stock is under review.

Educomp
Educomp Solutions recorded an outstanding 110.8% yoy growth in Revenues (standalone) in 2QFY2010 to Rs206.9cr (Rs98.1cr), while the consolidated Top-line surged 91.8% yoy to Rs253.5cr (Rs132.2cr). Educomp’s EBITDA Margins witnessed sharp contraction of 1300bp yoy, on a standalone basis, (1,085bp on a consolidated basis), during 2QFY2010. Educomp’s consolidated Bottom-line in 2QFY2010 grew by a robust 301% yoy to Rs115.5cr, aided by higher net Other Income of Rs81.7cr in 2QFY2010, up from Rs2.7cr in 2QFY2009. The standalone PAT also grew by 98.5% yoy to Rs50.4cr, aided by the robust top-line and higher Other Income of Rs 5.3cr (against loss of Rs 6.6cr). We maintain a Neutral view on the stock.

GCPL
For 2QFY2010, GCPL registered a strong Top-line growth of 65.4% yoy to Rs575.6cr (Rs348.1cr) on a consolidated basis, significantly ahead of our estimate of a 19.4% yoy growth to Rs415.7cr, aided by volume growth across all its segments and strong growth revival in its International business. On the operating margin front, the company posted a significant margin expansion of 750bp to 19.4% (11.9%), despite a 51.1% yoy increase in the operational expenditure, driven largely by the robust Top-line growth. GCPL’s bottom-line also registered a whopping growth of 167.8% yoy to Rs93cr (Rs34.7cr), despite an increase of 46% yoy in the depreciation cost to Rs6.8cr (Rs4.6cr), aided by strong margin expansion. The stock is currently under review, and the target price is expected to be revised after the conference call with the management on Tuesday.

Thermax
Thermax came out with its results for 2QFY2010. The company posted de-growth in its top-line of 15.4% yoy to Rs680cr (Rs804cr) for 2QFY2010. On the Operating front, however, Thermax managed to maintain its margins at 11.6%. Higher other income and a lower tax rate resulted in the net profit falling only 5.0% yoy to Rs54cr (Rs57cr). We will revisit our estimates after the conference call, and currently have an Accumulate recommendation on the stock.

Ashok Leyland
Ashok Leyland reported Net Sales of Rs 1,577.7cr (Rs 1,870.5cr) for 2QFY2010, a decline of 15.7% yoy. During 2QFY2010, ALL witnessed a 281bp yoy increase in EBITDA Margins. This was mainly on the back of increased pricing actions taken by the company in July and October, to the extent of 3.5%, combined with a dip in raw material prices of steel and aluminum, as well as cost-reduction measures that ALL has implemented in the past few quarters. The company has posted Operating profit of Rs166.1cr (Rs144.3cr) in 2QFY2009. Net Profit grew by 31.8% yoy to Rs88.6cr (Rs67.3cr), owing to better operating performance combined with better financial leverage. Interest costs which shown a substantial decline of 31% yoy and around 34% qoq, on account of fall in working capital from Rs1,550cr in 1QFY2010 to Rs900cr in 2QFY2010. On better than expected operating performance, we revise our EPS estimate for ALL to Rs2.6 (Rs1.8 earlier) in FY2010E and to Rs3.3 (Rs2.5 earlier) in FY2011E. At the CMP, the stock is trading at 13.8x FY2011E EPS. We remain Neutral on the stock, as most of the positives have been factored in the CMP.

IVRCL Infrastructure
IVRCL Infrastructure posted a muted Top-line growth of 7.1% to Rs1,217.8cr (Rs1,136.6cr) as against our estimate of Rs1,481cr. On the EBITDA front the company posted margins of 9.4% (8.0%) against our estimate of 8.4%. This good performance on the margin front was aided by a 264bp decrease in sub-contracting expenses as a percentage of sales. Interest costs and Depreciation expenses increased by 16.3% and 17.6% yoy, respectively. The Bottom-line de-grew by 14.6% to Rs48.8cr (Rs57.1cr) which was in line with our estimates of Rs50cr. This de-growth came primarily on account of low growth on the Top-line front. In light of the muted growth posted by the company in 2QFY2010 and mere 11.6% growth posted for 1HFY2010 to Rs2,304cr we revise downward our FY2010E and FY2011E Top-line estimates by 2.1% and 2.9% respectively. We have valued IVRCL Infra on a SOTP basis. We value IVRCL’s core construction at a Target P/E multiple of 14x (on FY2011E EPS) contributing Rs334 to our target price. We value the companies Road BOT assets at 1.5x P/BV (Contribute Rs29 to our target price) and its investments in subsidiary (IVR Prime and Hindustan Dorr-Oliver) at a 25% holding company discount to current Market Value (contribute Rs44 to our target price). We maintain our Buy rating on IVRCL, with a Target price of Rs407 and a potential upside of 17%.

Nagarjuna Construction
Nagarjuna Construction (NCC) posted a decent set of numbers, which were mainly in line with our estimates. The company reported a muted Top-line growth of 1% to Rs1067cr (Rs1056cr). However, NCC surprised on the EBITDA margin front by reporting margins to the tune of 10.2% (10.3%), against our estimates of 9.3%. On the Bottom-line front, the company reported a PAT of Rs43.4cr. We are upgrading the stock to Accumulate from Neutral, mainly on account of higher margins, lower interest costs and P/E re-rating. We will release a detailed report during the day with the exact Target Price. We recommend an Accumulate on the stock.

Deccan Chronicle
For 2QFY2010, Deccan Chronicle Holdings Ltd (DCHL) reported a modest growth of 10.8% yoy to Rs250.9cr (Rs226.4cr), aided by increased traction in the Bangalore print market and ~11% yoy increase in Ad revenue to Rs235cr (Rs212cr), on a standalone basis. DCHL’s Earnings for the quarter registered a whopping120.7% yoy jump to Rs99.9cr (Rs45.3cr), despite lower Other Income (fell 51.5% yoy, owing to a lower cash balance and yields), driven by a 43.9% drop in interest costs to Rs11.1cr (Rs19.8cr), as the company repaid debt and due to a significant Gross Margin expansion (due to lower newsprint prices). On the Operating front, DCHL registered a significant Margin expansion of 2,112bp, driving a 79.3% yoy growth in EBITDA to Rs138.7cr (Rs77.3cr). The company continued to benefit from the newsprint price crash globally, from the peak levels of US $950 (DCHL’s average newsprint cost this quarter stood at US $660), with the raw material cost showing a decline of 28.7% yoy, this quarter, to Rs83.5cr (Rs117.2cr). We have marginally revised our Top-line estimates for DCHL to factor in the higher-than-anticipated 2QFY2010 results. Going ahead, we expect Advertising revenues to pick up in 2HFY2010, driven by the uptick in economic activity and higher spend by sectors like Real Estate, BFSI and Auto However, on account of the recent run-up in the stock, we change the rating on the stock from Buy to Accumulate, with a revised Target Price of Rs149 (Rs142).

KEC International
KEC International came out with its results for 2QFY2010. The company posted a moderate growth in its top-line, of 8.5% yoy to Rs875cr (Rs807cr) for 2QFY2010. On the Operating front, margins expanded 339bp to 10.4% (7.0%). Higher margins, coupled with the lower tax rate, resulted in the net profit more than doubling to Rs42cr (Rs18cr). The financial estimates and rating are currently under review.

Simplex Infrastructures
Simplex Infrastructures (SI) posted Top-line growth of a mere 1.7% to Rs1,025cr (Rs1,008cr) for 2QFY2010, which was below our estimate of Rs1,097cr. This sluggish growth in Top-line is attributed to less revenue recognition, on account of slowdown in Order Inflow and delays in Order Execution. Earlier, management had guided for 15- 20% growth for FY2010E, but due to the poor performance in 1HFY2010, guidance is now revised to 10-15% growth. We had pruned our Top-line estimates in the last quarter itself and were expecting such downgrade owing to which we maintain our Topline estimates for FY2010. However, since Order inflow has still not picked up and is only expected by December 2009, we are downgrading our FY2011 estimates by 4%. On the Operating front, SI’s results were above estimates. EBITDA Margin at 10.4% (8.9%) exceeded our expectation of 8.8% for the quarter. SI’s Net Profit declined to Rs27.9cr (Rs29.8cr), which was a tad above our expectation of Rs25.0cr. Net Profit Margins stood at 2.7% (3.0%). This de-growth in Net Profit was primarily on account of subdued growth in Top-line. Net Interest costs also fell considerably not only because of lower debt levels, but also due to reduced cost of servicing debt at 8%. On the valuation front, considering that the stock is trading at 13.6x P/E and 2.2x P/BV on FY2011 estimates, which is at a discount to its historical average P/E band of 16-19x on one year forward P/E multiple. The P/E band is an average over three to five years. We believe that SI would trade at a lower P/E than its historical band going ahead as it would not enjoy the same growth as in the past. Therefore, our Fair Value for the stock is Rs493 (13x FY2011E Earnings), which is 4.7% lower than current levels. However, we are expecting 2HFY2010 to be much better mainly on account of the low base and improving Margins. We remain Neutral on the stock. We expect the stock to be under pressure in the short term and, hence, recommend Accumulate it at sub-Rs450 levels, when it would trade at lower than 12x on one year forward multiple and provide an upside of more than 10% to our Fair Price, as the overall outlook for the Sector remains optimistic.

Allcargo Global Logistics (3QCY2009)
Allcargo Global Logistics (AGL) reported 21.2% yoy and 4.9% qoq decline in Revenues to Rs497.9cr for 3QCY2009, which was significantly below our estimate. This was mainly due to subdued performance in Ecu Line (around 70% of Consolidated Revenues), which declined 15.6% yoy and 3.1% qoq in 3QCY2009 to Rs380cr. CFS volumes grew 17% qoq (0.8% up yoy) led by strong performance at JNPT and Mundra CFS with improving Exim visibility at the port. Ecu Line volumes grew 5% qoq (15% down yoy) to 43,060TEU. Standalone MTO volumes also grew 9.5% qoq (18.5% down yoy) to 6,422TEU. EBITDA Margin came in line with our estimate at 11.7%, which were almost flat qoq and yoy. AGL registered 13.8% yoy decline in Bottom-line to Rs36.3cr (Rs42.1cr) and flat qoq, which was in line with our estimate in spite of Revenue coming in below our estimate primarily due to the tax write back of Rs9.0cr. Adjusted for the same, PAT fell 37.8%, which was significantly below our estimate.
Post subdued performance in 3QCY009; we have lowered our Revenue estimate by 13.2% and 10.9% for CY2009E and CY2010E, respectively. However, we have maintained our CY2009E Earnings due to the tax write back, but lowered our CY2010E Earnings by 7.6%. We believe that the stock performance will depend on improvement in operational efficiency of ECU Line. At the CMP of Rs840, the stock is trading at 13.9x CY2010E EPS of Rs60.6 and 6.0x CY2010E EV/EBIDTA. We believe current valuations factor in the company’s near-term growth opportunities. Hence, we remain Neutral on the stock.

Sadbhav Engineering (SEL)
Sadbhav Engineering (SEL) posted a Top-line growth of 19.9% to Rs185.2cr (Rs154.5cr), against our estimates of Rs167cr. Top-line growth came primarily on account of SEL starting construction related work with respect to its Dhule Palasner - Madhya Pradesh and Border Check Post Road BOT projects, which are in the final stages of achieving financial closure. Excluding this, the Top-line would have been lower to the tune of Rs60cr. The EBITDA margins for the quarter came in at 11.0% (9.3%) against our estimates of 12.1%. The Bottom-line de-grew by 7.2% to Rs3.7cr (Rs4.0cr), against our estimates of Rs8.2cr. This de-growth on the Bottom-line front was witnessed mainly on account of 106.0% yoy increase in Interest costs to Rs8.6cr. Interest cost surged for the quarter ended 2QFY2010, as SEL borrowed in order to start construction related work with respect to its Dhule-Palasner – Madhya Pradesh and Border Check Post road BOT projects. We have factored in margin expansion of 130bp and 70bp in FY2010E and FY2011E, respectively, on account of better than expected 1HFY2010 margins and expected increase in revenues from the high margin mining excavation space. We have marginally increased our FY2011E Top-line estimates. SEL has started investing in the two road BOT projects and we consider these investments at Book–value, on a Pro-rata basis. SEL is expected to hold an analyst conference call, after which we shall release our report. We recommend an Accumulate rating on Sadbhav.

Orchid Chemicals
Orchid Chemicals reported its 2QFY2010 results, which were broadly in-line with our estimates. Net Sales came in at Rs304.8cr (Rs339.1cr) down 10.1% and were in-line with our expectations. Orchid launched Tazo+Pip in US with exclusivity during the end of September of 2009. The company reported OPM of 25.9% (26.8%), which was higher than our estimate of 23.0% and expanded sequentially by 570bp on account of a better product-mix and a relatively stable currency during the quarter. Orchid reported a Net loss of Rs13.2cr (loss of Rs40.7cr) and was lower than expected. Adjusting for Foreign currency losses, the company reported Net loss of Rs8.6cr (Rs40.9cr), which was subdued on account of higher interest cost, which increased by 81.3% to Rs56.6cr (Rs31.2cr).
For 1HFY2010, the company reported Net Sales of Rs610.7cr (Rs621.7cr), which was down by 1.8%, while Net loss came in at Rs42.9cr (loss of Rs72.3cr). On the Valuation front, the stock is trading at 15.6x FY2010E and 7.1x FY2011E earnings. We recommend an Accumulate on the stock, with a Target Price of Rs175.

Pratibha Industries (PIL)
Pratibha Industries (PIL) registered a mere 8.1% growth in Top-line growth for 2QFY2010 to Rs210.6cr (Rs194.8cr) as against our estimate of Rs268cr. Top-line growth was primarily suppressed on account of the lackluster performance registered by the Infrastructure Segment, which posted meagre growth of 7.5% toRs218.6cr. The Manufacturing (HSAW pipes) Division, on the other hand,witnessed de-growth of 12.7% to Rs41.1cr during the quarter. EBITDA Margins for the quarter came in at 13.6% (10.1%) as against our estimate of 9.9%. Margins improved primarily due to the high proportion of Revenues from the Water Segment as compared to the Road Segment.PIL’s 2QFY2010 Bottom-line came in flat at Rs10.6cr in line with our estimate. At Rs204, the stock trades at 4.9x FY2011E P/E and 1.0x FY2011E P/BV. We have valued PIL on P/E basis and arrived at a Target Price of Rs251, assigning a Target P/E multiple of 6x on Consolidated FY2011E EPS of Rs41.8. We maintain a Buy on the stock, with a Target Price of Rs251 (Rs266)

Sunil Hitech
Sunil Hitech came out with its results for 2QFY2010. The company posted a strong growth in its top-line of 53.2% yoy to Rs201cr (Rs131cr) for 2QFY2010. On the Operating front, however, Sunil Hitech reported a sharp fall in its margins at 10.9% (14.4%). Lower margins, coupled with higher tax rate, resulted in the net profit remaining flat at Rs7cr. The financial estimates and rating are currently under review.

Indoco Remedies
Indoco Remedies reported its 2QFY2010 numbers which were broadly in-line with our estimates. Indoco Remedies reported Net Sales of Rs95.4cr (Rs78.6cr), which was up 21.4% and higher than our estimate of Rs86.2cr. The company reported growth in Topline in 2QFY2010 after four consecutive quarters of de-growth on the back of traction in its Domestic Formulation business. The company’s OPM came in at 13.0% (7.4%), which was up by 556bp yoy and driven by Top-line growth. Indoco reported Net Profit of Rs9.2cr (Rs2.2cr), which was up 323.5% and driven by Top-line expansion. Interest cost during the quarter fell 54.8% to Rs0.7cr (Rs1.5cr) on the back of better Working capital management. For 1HFY2010, the company reported Net Sales of Rs193.8cr (Rs 188.1cr) which was up 3.0% yoy while Net Profit came in at Rs26.1cr (Rs 26.8cr) flat on a yoy basis.
Indoco’s 1HFY2010 results were in line with our estimates, and strong traction on the Domestic Formulation business and OPM fronts are likely to continue going forward. Further, we are positively surprised on the company’s capex plan, which is likely to result in strong volume growth for the company post FY2011. At the CMP, the stock is trading at 6.2x FY2010E and 5.6x FY2011E Earnings. We are raising our Target Multiple to 7x (6x) on the back of re-rating of the entire Sector and recommend a Buy on the stock, with a Target Price of Rs314, translating into potential upside of 26% from current levels.

Cinemax
For 2QFY2009, Cinemax registered a Top-line de-growth of 10.0% yoy to Rs40.4cr (Rs44.9cr), below our estimates, despite SPH increase of 3.3% yoy to Rs31 (Rs30). The Top-line decline is largely on account of 5.4% decrease in ATP to Rs122 (Rs129) and 600bp decline in the occupancy yoy to 21% (27%). Occupancy declined despite 12.5% yoy growth in footfalls to 2.7mn (2.4mn). The decrease in the Top-line may also be attributed to a weak movie pipeline (on a comparative basis with 2QFY09). The Bottom-line too registered a de-growth of 44.6% yoy to Rs2.4cr (Rs4.4cr), much below our expectations, despite a multifold increase in Other Income, 89.4% yoy growth to Rs1.6cr (Rs0.9cr), decrease in Depreciation cost and a flattish Interest cost (on absolute terms). For the quarter, Cinemax’s Operating Margins declined by 1,638bp to 15.4% (31.8%), pulling down the operating profit by 56.5% yoy to Rs6.2cr (Rs14.3cr). The stock is currently under review.

Economic and Political News
- Govt. mulls sops for select exporters
- Uttar Pradesh benefits from Focus Product Scheme
- Economy likely to grow by 8% next fiscal: Plan panel
- RBI's stringent norms to hit banks' profits: Moody's

Corporate News
- PGCIL to enter bond market to raise Rs4,000cr
- Hindalco plans to raise Rs3,000cr
- CAG auditing of RIL to begin this month
- J K Lakshmi to invest Rs1,600cr on expansion
- JK Tyre to increase radial supplies to Tata, Ashok Leyland