21 November 2011

Annual Report Analysis - Bharat Forge :Edelweiss

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Bharat Forge’s (BF) FY11 annual report highlights continuing negative FCFO on the back of consistent capex/acquisition. Efficiency ratios deteriorated as capex over the years failed to translate into revenue growth. Subsidiaries continue to report losses; however, during the year, they reported operating profits. Auditors of two subsidiaries highlighted reservation on going concern assumptions.

Consistent capex led to negative FCFO; deteriorated efficiency ratio
Over the past five years though BF’s cumulative capex was INR 25.4 bn, turnover posted a meager 4.0% CAGR. Consequently, the company’s fixed asset turnover ratio (ex CWIP) dipped from 3.1x in FY07 to 2.1x in FY11.

BF’s free cash flow for FY11 stood at INR (3.2) bn, primarily on account of huge capex. Out of the past five years, the company was able to generate positive free cash flow only in FY10.

Subsidiaries remain an overhang
Subsidiaries continued to report loss before tax of INR 256 mn (FY10: INR 2,085 mn) on back of higher depreciation and interest cost. However, during the year, EBIDTA margin of subsidiaries improved from (5.5)% to 3.2%, primarily on account of German and Chinese subsidiaries.

Auditors of Bharat Forge America (BFA), a wholly owned subsidiary, have drawn attention to the appropriateness of going concern assumption used for preparing its financial statement. In CY10, BFA had reported net loss of INR 210.5.5 mn (CY09: INR 234.5 mn). BF’s total investment in BFA as at FY11 end stood at INR 987.1 mn.

Auditors have opined that the going concern assumption is not valid for Bharat Forge Scottish Stampings (Scotland, BFSS), a step-down subsidiary, on the back of continuing losses. In FY11, BFSS had reported net loss of INR 76.1 mn (FY10: INR 12.1 mn). Its commercial operations have ceased and assets have been transferred to another subsidiary.

QIP, FCCB redemption contain D/E
BF’s D/E improved from 1.5x in FY10 to 1.0x in FY11, primarily on account of funds raised through QIP, warrants and redemption of FCCB.

BSE, Bulk deals, 21/11/11

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Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
21/11/2011590006Amrutanjan Health-$CROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB19994728.53
21/11/2011590006Amrutanjan Health-$CROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS20008726.19
21/11/2011511501Bharat Bhushan ShareDHAR MILANS170759.46
21/11/2011511672Clarus FinanceSATYAM RETAILS PRIVATE LIMITEDB10000033.60
21/11/2011533011CORALHUBSONAL SHARES INVESTMENT & COMPANY(MEET SUMANBHAI PATEL)B2150004.50
21/11/2011533011CORALHUBGHANTAKARNA SHARES AND SERVICES PRIVATE LIMITEDS2700004.50
21/11/2011531270Dazzel ConfPREMIER EXIM SERVICES PRIVATE LIMITEDB9500002.93
21/11/2011531695Dhvanil ChemGANESH BHAGOJI KHAIREB5000026.49
21/11/2011533333Fineotex ChemRUPAK TRADING PRIVATE LIMITEDB65000123.19
21/11/2011524754Gujarat MediALKA BHARGAVAB2411620.49
21/11/2011530165Kanchan IntlGANESH ANANT GHADGEB3680054.63
21/11/2011530165Kanchan IntlDHARMENDRA HARILAL BHOJAKS2677857.00
21/11/2011530165Kanchan IntlBHARAT HARILAL LOHARS1750054.40
21/11/2011533297Kirloskar Bros InvICICI PRUDENTIAL ICICI MUTUAL FUND A/C TAX PLANS29317700.00
21/11/2011530811Netvista InfoGAURANG AJITBHAI SHAHB570422.50
21/11/2011530971Nimbus IndsBIMALKUMAR G NAVADIAS2460081.23
21/11/2011533632Onelife CapitalNISHIL SURENDRABHAI MARFATIAB112849274.32
21/11/2011533632Onelife CapitalNISHIL SURENDRABHAI MARFATIAS112849274.08
21/11/2011511734Pasupati FinAMIT KRISHNAKANT THAKKERB2500019.19
21/11/2011503873Priyadarshini SpnBHAIJEE PORTFOLIO LTD.B6000031.94
21/11/2011523710Sayaji HotelsTRANS AGRO INDIA PRIVATE LIMITEDB400000140.00
21/11/2011523710Sayaji HotelsACACIA PARTNERS L PS200000140.00
21/11/2011523710Sayaji HotelsACACIA CONSERVATION FUND L PS200000140.00
21/11/2011530883Super CropSANDEEP MOTILAL SHAHS3517220.27
21/11/2011526582TPL PlastechLEADER SECURITIESB4105198.88
21/11/2011530363Ugar Sugar-$RAJEEV VIJAY DALVIB80000011.60
21/11/2011530363Ugar Sugar-$S B RESHELLERS PRIVATE LIMITEDS80000011.60
21/11/2011532765Usher AgroRAGA FINVEST LIMITEDB220000100.76
21/11/2011517498WEBELSOLARKHUSHAAL INVESTMENTS ADVISORY PRIVATE LIMITEDS11482620.03
* B - Buy, S - Sell
** = Weighted Average Trade Price / Trade Price

NSE, Bulk deals, 21-Nov-2011

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DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price
Remarks
21-Nov-2011AMRUTANJANAmrutajan Health LtdA.P.T. PORTFOLIO PRIVATE LIMITEDBUY19,911723.02-
21-Nov-2011AMRUTANJANAmrutajan Health LtdA.P.T. PORTFOLIO PRIVATE LIMITEDSELL19,911723.20-
21-Nov-2011AMRUTANJANAmrutajan Health LtdCROSSEAS CAPITAL SERVICES PVT. LTD.BUY19,967726.41-
21-Nov-2011AMRUTANJANAmrutajan Health LtdCROSSEAS CAPITAL SERVICES PVT. LTD.SELL19,967729.26-
21-Nov-2011ASTERSILIAster Silicates LimitedEPOCH SYNTHETICS PVT LTDBUY1,95,65011.17-
21-Nov-2011ASTERSILIAster Silicates LimitedSAAKSHI SHARES PVT.LTD.SELL2,00,00011.17-
21-Nov-2011CORAL-HUBCoral Hub LimitedGHANTAKARNA SHARES AND SERVICES PRIVATE LIMITEDSELL2,67,4634.50-
21-Nov-2011CORAL-HUBCoral Hub LimitedSONAL SHARES INVESTMENT & COMPANY (PROP- MEET SUMANBHAI PATBUY2,45,0004.50-
21-Nov-2011EDELWEISSEdelweiss Fin Serv LtdFIRST CARLYLE VENTURES MAURITIUSBUY66,58,18326.29-
21-Nov-2011IVRCLINFRAIVRCL LimitedPUNEET VINCOM PRIVATE LIMITEDBUY16,53,88932.67-
21-Nov-2011KBILKirloskar Bros Invest LtdICICI PRUDENTIAL MUTUAL FUND A/C TAX PLANSELL29,316700.00-
21-Nov-2011ONELIFECAPOnelife Cap Advisors LtdVARDHAMAN INVESTMENTBUY1,18,122274.90-
21-Nov-2011ONELIFECAPOnelife Cap Advisors LtdVARDHAMAN INVESTMENTSELL1,18,122276.88-
21-Nov-2011PIPAVAVDOCPipavav Def & Offshr EngKROSSLINK INFRASTRUCTURE LTDBUY35,00,00056.65-
21-Nov-2011RAJTVRaj Television Network LiSHANMUGASUNDARAM SUBRAMANIANBUY82,50071.28-
21-Nov-2011TIJARIATijaria Polypipes LtdSHOBHIT BHANSALIBUY1,48,66714.01-

FII DERIVATIVES STATISTICS FOR 21-Nov-2011

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FII DERIVATIVES STATISTICS FOR 21-Nov-2011 
 BUYSELLOPEN INTEREST AT THE END OF THE DAY 
 No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
INDEX FUTURES1943564635.331872514466.1274366617561.02169.20
INDEX OPTIONS83691220267.0785253020737.84218681252243.34-470.76
STOCK FUTURES2957426665.932802846368.32131977128900.64297.61
STOCK OPTIONS14646336.9413360305.36443461005.1331.58
      Total27.63

 


-- 

21/11/11: FII & DII Turnover (BSE + NSE) (Rs. crore)

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FII & DII Turnover (BSE + NSE)
(Rs. crore)
FIIDII
Trade DateBuySalesNetBuySalesNet
21/11/111,886.492,629.51-743.021,351.35755.80595.55
18/11/111,796.372,667.99-871.621,375.06994.67380.39
17/11/111,943.272,138.47-195.201,149.83778.24371.59
Nov , 1126,162.9627,502.14-1,339.1812,643.5412,352.87290.67
Since 1/1/11   *545,561.81564,878.23-19,316.42254,910.37232,574.2022,336.17

IPCA Laboratories ; TP: INR378 Buy: Motilal oswal,

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Smoother road ahead
APIs, Brands, Capacity expansion
 One of the better managed mid-cap pharma companies in India with (1)
vertically integrated business model, (2) strong domestic formulations
business, and (3) profitable international business.
 Sharp 30% correction in stock price on short-term headwinds offers lucrative
long-term entry opportunity.
 Long-term story intact; offers balanced play on growing domestic
formulation opportunity and international formulations on the back of strong
API capabilities.
Consistent industry outperformer in domestic formulations: Over FY05-11, IPCA's
domestic formulation business clocked revenue CAGR of 22.5%, over 1.5x the industry
CAGR of 14%. As a result its market share has improved from 1.18% in FY06 to
1.42% in FY11. IPCA has consistently outperformed the market growth rate on the
back of multiple drivers: (1) Growing share of chronic therapeutic segments in revenue
mix, (2) Focus on product selection, brand building and new launches, (3) Expansion
in the field force, and (4) Proper divisionalization of products. Given all these positives,
we expect IPCA to maintain its track record of outperforming the industry growth rate.
After a muted 10% growth in FY12, we expect growth to rebound to 18% levels in
FY13, translating into FY11-13 CAGR of 14% (v/s 14% for the industry).
APIs offer core competitive advantage of vertical integration: IPCA is one of
India's largest manufacturers of APIs, and the global leader in select APIs, with market
share of 50%+ coupled with healthy profitability. IPCA is aiming to be world leader in
~25 APIs in the next 3-4 years (15 currently). This augurs well for the company as (1)
it offers core competitive advantage of vertical integration benefit, and (2) it creates
opportunity to grow revenues beyond captive demand.
Geographic expansion and new Indore SEZ to drive international formulations
growth: IPCA has built a strong international formulation business with presence in
110 countries across regulated and emerging markets. This business has two main
segments: (1) Branded generics, and (2) Pure generics. We believe IPCA's branded
generic business will grow at CAGR of 20-25% over the next two years on the back of
(1) Strong sales force, (2) Geographic expansion to South/Central American and Western
African countries; and (3) Introduction of new products. The key drivers of pure generics
business are: (1) Europe: Geographic expansion beyond UK, (2) US: FDA approval
for Indore SEZ, and (3) Africa: Lucrative opportunity in Artemether-Lumefantrine, an
anti-malaria formulation.
Expect 25% earning CAGR over FY11-13; Initiate with Buy and price target of
INR378: We expect IPCA to clock FY11-13 PAT and EPS CAGR of 25% on the back
of 18% revenue CAGR coupled with margin expansion. Further, despite INR5b capex
to sustain growth, the company is likely to sustain healthy return ratios and low gearing.
At 9x FY13 earning, the stock trades at 25-50% discount to its historic and peer
valuation. Initiate coverage with Buy rating and target price of INR378 (14x FY13E
EPS), 50% upside.

Colgate Palmolive ; TP: INR827 Sell: Motilal oswal,

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Colgate Palmolive's (CLGT) 2QFY12 results were in line with our estimates as PAT increased 7% to INR1,076m (against
our estimate of INR1,085m). Strong volume growth of 15% in toothpastes drove overall 13% volume growth, but increased
investment in new launches and aggressive promotion resulted in a 45% increase in ad-spends (up 310bp), which
impacted profitability.
 2QFY12 results in line with estimates as adjusted PAT increases 7.2%: Net sales grew 19.1% to INR6.6b
(against our estimate of INR6.3b) due to overall volume growth of 13% and 15% volume growth in toothpaste. Gross
margin declined 20bp YoY to 59.9% (against our estimate of 59.8%) due to higher input costs (up 30bp QoQ). Adspends
increased 44% YoY to 17.4% of sales (up 310bp) led by new launches and aggressive sales promotion
schemes. EBITDA margins thus declined 190bp to 20.9%. EBITDA increased 9% YoY to INR1.4b (against our
estimate of INR1.4b). Adjusted PAT increased 7.2% to INR1,076m (against our estimate of INR1,085m). The tax rate
was higher by 80bp at 22.9%. Reported PAT declined by 1% to INR997m due to one-time VRS and exceptional costs
related to closure of its Hyderabad toothpowder factory.
 Valuations at a high, factor in structural positives; Maintain Sell with a target price of INR827, 21% downside:
We believe CLGT's strong positioning and single-segment focus make it a formidable competitor in the oral-care
market and CLGT is likely to continue posting healthy double-digit growth over the medium term. We expect P&G to
launch Oral B toothpaste in India. This will trigger fresh competition in the toothpaste market in India, which would
have growth and margin implications for the entire oral-care segment. We increase our estimates for toothpaste
volume growth from 12.5% to 14% but continued input cost pressures and higher ad-spends keep our estimates
largely unchanged. We believe the stock, at 31.8x FY12E EPS of INR32.7 and 27.6x FY13E EPS of INR37.7, factors
in all structural positives and it trades at a 25% premium to its five-year average P/E multiple. Maintain Sell.