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Indian stock market and companies daily report (February 12, 2013, Tuesday)
The Indian market is expected to open flat with a negative bias, mirroring SGX Nifty which is trading lower in the opening trades. Major Asian indices except Nikkei are still closed for the Lunar New Year holiday.
The US market saw modest weakness throughout the trading session. Selling pressure prevailed although subdued. The major averages climbed near the unchanged line in the final hour of trading but still ended the day in the red. The European markets finished MondayRs.s trading session with mixed results. Some negative news for pharmaceutical company Novo Nordisk weighed on investor sentiment at the start of the new trading week.
Meanwhile Indian shares swung between gains and losses before ending modestly lower on Monday, dragged down by capital goods, IT and FMCG stocks. Adding to growth concerns, Reserve Bank of India Governor cautioned that the country was headed for the highest ever current account deficit this fiscal year.
The trend deciding level for the day is 19,474 / 5,900 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,530 - 19,600 / 5,922 - 5,945 levels. However, if NIFTY trades below 19,474 / 5,900 levels for the first half-an-hour of trade then it may correct up to 19,404 - 19,347 / 5,877 - 5,855 levels.
3QFY2013 Result Review
ONGC (CMP: Rs.308/ TP: -/ Upside: -)
ONGC reported better than expected 3QFY2013 results. The companyRs.s top line increased by 15.7% yoy to Rs.21,093cr (above our expectation of Rs.19,294cr). ONGCRs.s crude oil net realization increased by 6.7% yoy to US$47.9/bbl and gas realizations increased 10.5% yoy to 8.4/scm due to INR depreciation against the USD. Crude oil sales volumes grew 7.0% yoy to 6mn tonnes while gas sales volumes remained flat yoy at 5bcm. The company shared a subsidy burden of Rs.12433cr in 3QFY2013. The companyRs.s EBITDA increased by 5.4% yoy to Rs.11,342cr. Other income grew by 33.7% yoy to Rs.1,280cr which resulted in adjusted net profit growing by 54.5% yoy to Rs.5,562cr (above our expectation of Rs.4,843cr). The company has maintained its oil/gas production guidance to 27.0mn tonnes/25.7bcm and 29.1mn tonnes /26.4bcm for FY2013 and FY2014, respectively. We keep our rating and target price under review.
Jaiprakash Associates (CMP: Rs.73/ TP: Under review)
For 3QFY2013, Jaiprakash Associates posted mixed set of numbers with strong performance on revenue however earnings were lower than our estimate owing to lower-than-expected operating performance On the top-line front, companyRs.s reported revenue of Rs.3,431cr in 3QFY2013, registering a growth of 15.5% yoy which was higher than our estimate by 4.3%. The cement segment had growth of 7% on a yoy basis while construction segment and real estate revenue grew by 2.7% and 98.9% on a yoy basis respectively. Blended EBITDA margins decline by 603bp/395bp on a yoy/qoq basis to 23.2% and was below our expectation of 25.9%. Cement margins came in at 8.0% which led to decline in margins. Interest cost stood at Rs.533cr a jump of 20.7%/14.7% on yoy/qoq basis and marginally higher than our estimate of Rs.478cr. Depreciation cost came at Rs.181cr a jump of 9.9% on yoy basis. On the bottom-line front, company reported a PAT Rs.111cr a dip of 64.2% on a yoy basis owing to lower-than-expected at operating level and high interest cost. The stock rating is currently under review.
Britannia Industries (CMP: Rs.465/ TP: Rs.584/ Upside: 26%)
Britannia Industries posted a 16.8% yoy growth in standalone topline to Rs.1,453cr, which was in-line with estimates. The topline growth was aided by price hikes carried out by the company. OPM fell by 20bp yoy to 6.4%. Net Profit rose by 5.4% yoy to Rs.57cr. We maintain a Buy on the stock with a Target Price of Rs.584.
Indraprasth Gas (CMP: Rs.257/ TP: -/ Upside: -)
Indraprasth Gas reported robust 3QFY2013 results. Net sales grew by 31.1% yoy to Rs.869cr which was driven by increases in both, sales as well as realizations. CNG and PNG volumes increased by 7.6% and 17.4% yoy to 194mn kg and 84mmscm, respectively. Average CNG realisation increased 20.0% yoy to Rs.38/kg, whereas average PNG realizations increased by 11.3% yoy to Rs.26/scm. EBITDA increased by 24.9% yoy to Rs.188cr. However, EBITDA margin slipped 1 07bp yoy to 21.6% due to higher cost of gas purchases. Further, interest expense was flat yoy at Rs.14cr in 3QFY2013. Tax provisions for this quarter were also higher at 32.4% compared to 31.9% in 3QFY2012. Hence, net profit grew by 24.3% yoy to Rs.86cr. We recommend Neutral on the stock.
JSW Ispat reports weak 3QFY2013 results
JSW Ispat, which is expected to be merged with JSW Steel during CY2013 reported weak results for 3QFY2013. Its net sales grew by 4.4% yoy to Rs.2,678cr. However, its EBITDA decreased by 1 2.4% yoy to Rs.129cr mainly due to lower steel prices and higher costs. It reported an interest cost of Rs.248cr which resulted in a net loss of Rs.131cr in 3QFY2013, compared to a loss of Rs.301cr in 3QFY2012. We maintain our Neutral view on the JSW Steel.
Hexaware (CMP: Rs.84/ TP: Under review)
For 4QCY2012, Hexaware reported broadly in-line set of results. The USD revenue came in at US$92.4mn, down 0.4% qoq. In INR terms, revenue came in at Rs.502cr, down 1.0%. The companyRs.s EBITDA and EBIT margin declined by ~480bp qoq each to 16.9% and 15.1%, respectively. Margin decline was less than expectations as well as less than managementRs.s guidance of ~500-700bp qoq. PAT came in at Rs.66cr.
Management has guided for double digit revenue growth in CY2013 and indicated intention to retain ~50% dividend payout ahead. Management has given 2-3% qoq USD revenue growth for 1QCY2013 and expects margins to improve by ~150-200bp qoq in 1QCY2013. The company expects growth to be driven by aggressive client mining outside of top 10 clients and BFSI vertical. We continue to remain positive on the stock and the target price in currently under review.
Sadbhav Engineering (CMP: Rs.121/ TP: Under review)
For 3QFY2013, Sadbhav Engineering (SEL) reported a disappointing set of numbers, which were significantly below our and consensus estimates. On the topline front, SEL reported a revenue decline 51.3% yoy to Rs.353cr which was significantly below our and street estimate by 53% and 40% respectively. This dismal performance has been owing to slower execution pace in remaining under construction projects. On the margin front, the company posted EBITDAM of 9.4% a dip of 200bp on yoy basis and was lower than our estimate of 10.3%. Interest cost grew by 28.2% yoy/17.1% qoq to Rs.21 cr and was in line with our estimate. On the bottom-line front, companyRs.s PAT reported a decline of 91.1% yoy to Rs.4cr in 3QFY2013 against our estimate of Rs.38cr. This was mainly due to lower-than-expected revenues and higher interest expense during the quarter. At CMP, the stock is trading at P/E and P/BV of 13.7x and 2.1 FY2014 earnings. The stock rating is currently under review. We shall revise our estimates post earnings conference call with the management which is expected to be scheduled on 13th February 2013.
Punj Lloyd (CMP: Rs.52/ TP: -/ Upside: -)
For 3QFY2013, Punj posted mixed set of numbers with muted performance on revenue and EBITDAM front, however higher share of profits from associates led to a profit at earnings level. The company reported a flat top-line growth of 2.6% yoy to Rs.2,881cr in 3QFY2013. EBITDA margins showed an improvement of 431 bp yoy to 10.1% in 3QFY2013. For the quarter, interest cost increase by 22.2% yoy to Rs.198cr while depreciation came in flat at Rs.88cr respectively. On the bottom-line front, PAT came in at Rs.9cr in 3Q FY2013 vs. Rs.70cr in 2QFY2013. This was mainly due to higher share of profit from associate (Rs.8cr vs. a loss of Rs.5cr in 2QFY2013). We continue to maintain our Neutral view on the stock.
Electrosteel Castings's associate, Electrosteel Steels, reports 3QFY2013 results
Electrosteel Steels (ESL), an associate of Electrosteel Castings (ECL) reported an operating loss during 3QFY2013 as most of its integrated steel plants are yet to commission operations. ESLRs.s top-line stood at Rs.55cr compared to Rs.0.2cr in 3QFY2012 as the company commenced partial operations at its plant (pig iron and DI pipes) during 1HFY2013. It reported an operating loss of Rs.16cr during the quarter. Depreciation and interest expenses stood at Rs.14cr and Rs.34cr, respectively. Hence, it reported a loss at the PAT level of Rs.64cr. We maintain our Buy rating on ECL with a target price of Rs.34.
GIPCL (CMP: Rs.70/ TP: Rs.78/ Upside: 11 %)
For 3QFY2013, GIPCL reported sluggish top-line performance in-line with our expectations. Top-line declined by 4.8% yoy to Rs.369cr, in spite of 6.6% yoy increase in power generation. OPM expanded by 1,344bp yoy to 37% mainly on account of 1,207bp yoy reduction in fuel cost. The company posted robust growth in net profit to Rs.70cr (v/s Rs.17cr in 3QFY2012) aided by margin expansion and lower tax provision. We maintain Accumulate rating on the stock.
Dishman Pharma (CMP: Rs.94/ Target: Rs.145/ Upside: 54%)
Dishman Pharma reported sales mostly in line with expectations, while the net profit came in below expectations. The top-line grew by 19.6% to Rs.318cr , mostly in line with expectations of Rs.315cr during the quarter 3QFY2013. The top-line growth was mainly driven by the CRAMS, which grew by 23.8%, while MM grew by 12.4% yoy. The OPM came in slightly lower than expectations at 19.1%, a 120bp decline. This along with high interest expenses led the net profit to come in at Rs.16.4cr, almost same as Rs.16.7cr.We maintain a Buy with a target on the stock of Rs.145.
Godawari Power and Ispat (CMP: Rs.103/ TP: Rs.112/ Upside: 9%)
Godawari Power and Ispat (GPIL) reported healthy 3QFY2013 results. The companyRs.s net sales grew by 25.3% yoy to Rs.603cr on account of higher sales volumes of Billets, HB wire and ferro alloys partially offset by lower realizations. On the operating front EBITDA margin was flat at 11.6% and EBITDA grew by 24.9% yoy to Rs.70cr. Interest expenses increased by 8.9% yoy to Rs.30cr however, net profit increased by 75.8% yoy to Rs.20cr. We recommend an Accumulate on the stock with a target price of Rs.112.
3QFY2013 Result Preview
SAIL (CMP: Rs.81/ TP: -/ Upside :-)
SAIL is expected to announce its 3QFY2013 results today. We expect the companyRs.s top-line to grow by 10.7% yoy to Rs.11,730cr due to better realizations. We expect EBITDA margin to contract by 310bp yoy to 10.6% on account of higher staff costs and other expenses. The bottom-line is expected to fall by 34.9% yoy to Rs.716cr. We maintain our Neutral rating on the stock.
Motherson Sumi Systems (CMP: Rs.190/ TP: -/ Upside: -)
Motherson Sumi Systems (MSS) is scheduled to announce its 3QFY201 3 results today. We expect MSS to report improvement in its operating performance driven by pick-up in order execution at the new plant in Hungary. On a consolidated basis, we expect the company to record revenues of Rs.6,169cr from Rs.3,841cr in 3QFY2012 mainly on account of consolidation of Peguform operations. On the operating front, the company is expected to report a ~75bp yoy expansion in margins to 7.4%. As a result, adjusted net profit is expected to increase —11 5.9% yoy to Rs.127cr. At the CMP of Rs.190, the stock is trading at 17.9x FY2014E earnings. Currently we have a Neutral rating on the stock.
HTMedia (CMP: Rs.97/ TP: Rs.121/ Upside: 25%)
HTMedia is slated to announce its 3QFY2013 results. The companyRs.s top-line is expected to register subdued growth of 3% yoy to Rs.535cr. Its OPM is expected to expand by 106bp yoy to 15%. Consequently, profit is expected to grow by 3% yoy to Rs.50cr. At the current market price, HTMedia is trading at 13.2x FY2014E consolidated EPS of Rs.8.3. We maintain Buy on the stock.
CCCL (CMP: Rs.15 / TP: - / Upside: -)
Consolidated Construction Consortium (CCCL) is expected to post a decent set of numbers for 3QFY2013. We expect the top-line to register a growth of 10.0% yoy to Rs.491cr, given the pickup in execution across projects. On the EBITDA front, we expect the company to continue its dismal performance; however, owing to the low base of 3QFY2012, its EBITDAM is expected to register an improvement of 162bp yoy to 6.2%. On the bottom-line front, the company is expected to post a profit of Rs.3cr for 3QFY201 3 vs. a loss of Rs.3cr in 3QFY2012. We maintain neutral view on the stock.
Economic and Political News
- Chidambaram to meet state FMs on February 14 on GST rollout
- Domestic car sales decline 1 2.45%, bike sales up 7.45% in January
- Government to give Rs.25,000cr additional fuel subsidy
- Court to decide on Bharti-Vodafone chargesheet on February 19
- InterContinental signs contract with HCCRs.s Lavasa township to open 200 room hotel
- Nalco to hit market after budget, to raise Rs.1,400cr
- Nielsen increases TCS contract size to US$2.5bn
- RCom, Ericsson sign US$1bn managed services contract
- RIL to shut Jamnagar crude distillation unit for four weeks
- Shree Renuka Sugars to set up US$220mn refinery complex in Lanka
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