06 December 2011

Oil India (OILI.BO) Alert: 2Q: Some One-Offs, but Strong Operationally   Citi Research

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Oil India (OILI.BO)
Alert: 2Q: Some One-Offs, but Strong Operationally
 Operationally strong 2Q — OIL’s 2QFY12 PAT came in at Rs11.4bn (+24% yoy,
+34% qoq), boosted by a combination of production growth and subsidy burden
remaining at one third. Reported PAT was, however, below estimates owing to one-off
provisions of Rs2.86bn on employee costs and higher-than-expected DD&A costs,
which also included one-offs (provision for minimum work programme) of cRs3.6bn.
 No subsidy surprises; net realizations at US$86 — OIL’s 2Q net realizations came
in at US$86/bbl, and were driven by strong crude prices, lower subsidy burden
following the June price hikes and duty cuts, and upstream share remaining at a third
of gross under-recoveries (without including any notional losses). Realizations at these
levels are, however, clearly unsustainable, given rising under-recoveries of the OMCs,
worsening Gov’t finances, and the lack of political will to raise prices of controlled fuels.
 Production growth continues, but near-term upsides unlikely — OIL’s 2Q crude
production came in at 0.99 MMT (+6.2% yoy, +3.6% qoq), in line with expectations.
Gas production growth was even stronger (+16.1% yoy, +5.6% qoq), on the back of
ramp-up of supplies to the NRL refinery from the Duliajan-Numaligarh pipeline.
However, with most production growth now largely behind us, we expect volumes to be
sustained at current levels in the near-term.
 No clarity on subsidy sharing, 2H could be a dampener — A combination of
sustained strength in crude and sharp rupee depreciation has led to the under-recovery
situation considerably worsening in the last couple of months. Gross under-recoveries
for FY12 are unlikely to come in below Rs1.2 tr (Rs214bn in 2Q) if current trends in
crude, currency, and policy continue, considerably increasing uncertainty for the gov’towned
upstream companies for the rest of the year. A re-rating in the absence of a
reversal in trend of at least one of the above external factors is unlikely. OIL’s cash on
books at Rs136bn (Rs565/sh) could, however, provide downside support.

Sintex Industries:: Nirmal Bang

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Weak Corporate Governance To Cap Valuation
Sintex Industries (SIL) clarified on 17 November 2011 that it has received a
power EPC order from Shirpur Power, sponsored by its promoter. To fulfill the
ambition of its promoter, SIL tried to diversify in unrelated power and oil & gas
ventures in FY10, but following the concerns raised by investors, the promoter
decided to set up the power plant in his personal capacity. But SIL’s arm
accepting the power EPC order from Shirpur Power and hiding this information
from investors for four months has led to a corporate governance issue.
Factoring in the order win, we revise our FY13 revenue/EBITDA/PAT estimates
by 4.8%/1.1%/0.3%, respectively, but due to corporate governance issue we
downgrade SIL to Hold from Buy with a revised TP of Rs96 (from Rs167 earlier).
Sintex kept large order win a secret since a long time: In a clarification issued on
17 November 2011, SIL stated that Sintex Infra Projects or SIPL (a100% subsidiary)
received a Rs7bn order from Shirpur Power. As per information on the Department of
Heavy Industries’ web site, SIPL sub-contracted 2x150MW BTG (boiler, turbine and
generator) order worth Rs7bn to Bharat Heavy Electricals in July 2011. The delay in
making public the information regarding SIPL getting the order raises a serious
corporate governance issue. However, as per our interaction with SIL management,
total value of the order received by SIPL relating to the 2x150MW EPC project was
~Rs11bn out of which BTG order worth Rs7bn was sub-contracted to BHEL, while the
Balance of Plant (BoP) work would be executed by SIPL along with its arm Durha
Construction.
Related party transaction raises concerns over corporate governance: SIL’s
promoter and his relatives are shareholders of Sintex Power, one of the sponsors of
Shirpur Power. Receipt of such large order by SIPL, SIL’s arm, from Shirpur Power
raises the issue regarding related party transaction, particularly when SIPL has not
executed any power EPC job. Majority of established EPC/BoP players like BGR
Energy, Larsen & Toubro etc are facing dearth of orders, as the new order pipeline of
the power sector has dried up and competition intensified. In such a scenario, we are
not bullish about SIL’s entry into the power EPC business. Following aggressive
bidding at Rs37/MW, we expect SIL to report lower margin on this order. In addition,
due to the group company’s transaction, prospects of favourable working capital terms
can’t be ruled out, which might elongate SIL’s working capital cycle.
Valuation: Factoring weak corporate governance and other factors, SIL has declined
20% in the past three days and 40% in the past three months. It is trading at the lower
end of its valuation band at 4.1x/3.7x FY13E P/E and EV/EBITDA, below the sevenyear
median of 8.9x/6.6x Following weak corporate governance we expect the stock’s
valuation to remain caped and downgrade it to Hold with a revised TP of Rs96 (from
Rs167) valuing it at 3.9x EV/EBITDA (40% discount to its median of 6.6x).

IRB Infrastructure: Strong construction; toll collections broadly in line apart from Bharuch-Surat ::Kotak Securities

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IRB Infrastructure (IRB)
Infrastructure
Strong construction; toll collections broadly in line apart from Bharuch-Surat. IRB
reported revenues of Rs7.36 bn (up 50% yoy) led by construction (Rs4.97 bn), however, high
interest expenses led to 9% yoy growth and 18% sequential decline in PAT to Rs1.1 bn. Traffic
growth was 6% in Mumbai-Pune and Surat-Dahisar but Surat-Bharuch at 3.5% was below
expectation (toll collections of Rs387 mn on Tumkur-Chitradurga). Marginally revise earnings and
retain BUY (TP: Rs200) on the back of strong execution, balance sheet and upside to target price.

Metals & Mining: Stay positive, underscore near-term pain ::Kotak Sec

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Metals & Mining
India
Stay positive, underscore near-term pain. We fine-tune our commodity forecast for
FY2012-14E. Continued uncertainty on sovereign debt crisis in Eurozone, global
slowdown and weak financial sentiment may weigh on base metals prices. However,
the prices are supported by the fact that many commodities are trading well below
marginal cost of production. We cut aluminium price forecast to US$2,225-2,450/tonne
and zinc to US$2,025-2,300/tonne for FY2012-14E. We cut EPS estimates of nonferrous
names by 2-9% for FY2012-14E but maintain positive view on attractive
valuations. HZ is our top pick.

Opto Circuits :TP: INR289 Neutral : Motilal Oswal

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 OPTC reported 69.6% YoY growth in revenue to INR5.62b (v/s our estimate of INR5.41b), 46.3% YoY growth in
EBITDA to INR1.55b (v/s our estimate of INR1.39b) while EBITDA margin contracted by 438bp to 27.5% (v/s our
estimate of 25.8%). Adjusted PAT grew 56.3% YoY to INR1.21b (v/s our estimate of INR991m), led by better operational
performance and lower depreciation and tax expense.
 Topline growth was led primarily by the acquisition of CSC. Ex-CSC, OPTC's topline is estimated to have grown by
24.3% YoY to INR4.12b, led by the non-invasive segment, which is estimated to have grown 35.9% YoY.
 EBITDA growth was muted compared to topline growth because of higher staff cost and other expenses related to
CSC acquisition.
 Adjusted PAT grew 56.3% YoY to INR1.21b (v/s our estimate of INR991m), boosted by lower than estimated depreciation
and tax expense.
OPTC has delivered strong revenue and earnings growth over the last few years. It has consistently maintained its high
return ratios. Despite rapid growth, the company still remains a marginal player in the global medical devices industry,
which gives OPTC the opportunity to sustain its high revenue growth rate for the next couple of years. We believe that
OPTC should strong growth in both the invasive and non-invasive businesses, on the back of large market opportunity,
expanding distribution network and geographical spread, new product launches and low base. However, rapidly rising
debt on the books, large goodwill coupled with high working capital requirements and very low free cash flow generation
remain concerns. Also, the company is planning to raise money through equity dilution in one of its subsidiaries, which
will dilute earnings in the near future. The stock trades at 10.2x FY12E and 8.4x FY13E EPS. We maintain Neutral with
target price of INR289 (10x FY13E EPS).

Buy GREAVES COTTON; TARGET PRICE: RS.110 :Kotak Sec

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GREAVES COTTON LTD
PRICE: RS.74 RECOMMENDATION: BUY
TARGET PRICE: RS.110 FY13E P/E: 9.1X
q Greaves Cotton is one of the largest makers of light diesel engines in the
world. Over the years, the company's focus on R&D has resulted in an
efficient product which is gaining acceptance with OEMs like M&M and
Tata Motors. The company is in negotiations with OEMs for taking price
hikes on products. If these hikes materialize then we expect margins to
respond positively in Q4FY12. The stock is down 14% since the beginning
of the month. We reiterate BUY with a target price of Rs.110, providing
an upside of 47%.
q Risks and Concerns: Firming of interest rates is negative for 3W demand.
3W volumes were weak in October especially of Piaggio. Elevated
interest rates may have begun to soften demand. However,
the long-term drivers remain intact (rising urbanization).
Management remains optimistic about the growth outlook and is
enhancing capacities for various products. We recommend buying
into stock correction.
n The company is the sole supplier of light diesel engines to OEMs like Piaggio,
M&M and Atul Auto. Piaggio is the prime client accounting for the bulk of automotive
engines revenue. We estimate 3W's to account for roughly 70-80% of
auto revenues and around 50% of total revenue for the company and hence is
an important variable to monitor.
n The company is thus a part play on the 3W segment (passenger and cargo)
which in turn is driven by rising urbanization and usage of light cargo vehicles for
intra-city transportation.
n The Indian 3W sales volumes during the Apr-Oct 2011 stood at 525809 units vs
454173 units, a growth of 16% yoy. However, the demand has started to moderate
in recent months.
n Piaggio's 3W sales in Apr-Oct 2011 are down marginally. For Oct 2011, Piaggio
3W volumes were down 5.4% yoy for the third consecutive week. However, the
impact has been cushioned by strong volumes from M&M and Atul Auto during
the same period. As a result, the volumes for GCL's OEMs were up 9% yoy in
the same period.
n While the growth in the 3W segment has seen moderation (primarily due to economic
slowdown and higher interest rates), strong numbers from the non-auto
side (Industrial engines, exports and diesel pumpsets) has enabled the company
to post 18% yoy growth in engine segment in H1FY12. The company indicated
that volumes in the industrial engines segment doubled on a yoy basis. Similarly,
international operations (Rs 200 mn in H1 FY12) also reported substantial jump in
revenues in the current fiscal.
n We understand from our industry interaction that the general inflationary conditions
and firm interest rates have pulled down the growth in 3W in current fiscal.
Apart from this, there is general shift in demand from 3W cargo to 4W mini
trucks. Over the medium-term, the 3W segment is forecast to grow at 8-10% pa.

n The 4W LCV segment has continued to defy the economic slowdown and has
been posting strong volumes. LCV volumes in Apr-Oct period have grown 34%
yoy to 220,321 units. Tata Motors continues to lead this segment with a market
share of 55%.
n Tata Motors has an exclusive sourcing arrangement with GCL for single cylinder
diesel engine to be fitted for its Magic Iris/Ace Zip LCV models in the 0.6 ton
range. Supplies have started meaningfully since the month of September.
n The company indicated that initial feedback for this vehicle has been good and
volumes are going up progressively. The company is currently clocking volumes
of 4000 per month and expects to deliver ~30000 units in the 2H FY12.
DG sets - (15-17% of revenues)
GCL is mainly present in the low and mid KVA range upto 250 KVA. The market for
DG sets has slowed down in the current fiscal due to moderating economic activity
and sharp cutback by the Telecom industry. As a result, there has price undercutting
by various players.
Infrastructure Equipment segment - (15-17% of revenues)
In the infrastructure equipment segment, the company makes concrete mixers and
pavers. This segment was affected by monsoons and change in emission norms
which disrupted engine supplies. Consistent interest hikes have also resulted in softening
of demand.
Power Tillers- - (15-17% of revenues)
With the various measures adopted by the government and a normal monsoon the
agriculture sector continue to drive healthy demand for low-cost mechanisation.
The government's strategy to improve credit availability and interest subvention
to farmers coupled with rising cost of manual labour is spurring the growth in this
sector. The power tiller sector in India is largely dependent on Government subsidies
and is growing around 20% p.a. The industry is witnessing intense competition
from Chinese brand tillers that are increasing their presence in the domestic
market and posing a major challenge in this segment. The major player in this segment
is VST Tillers (Revenues of Rs 2.7 bn in FY11). Currently, compared to China,
farm mechanisation remains at low level in india. Realising its potential, GCL has already
spread its presence across the country and is now present in 440 districts. The
revenues from this segment are seasonal in nature with Q3 accounting for bulk of
sales.


Other Highlights
n GCL is in negotiations with OEMs for taking price hikes on products. These are
expected to materialize in Q3 and Q4 and should aid improvement in EBITDA
margins going forward.
n The company continues to be net debt-free with borrowings of Rs 313 mn and
cash worth Rs 289 mn as on September 2011.
n There has been an increase in working capital mainly due to higher inventories
and loans and advances (mainly due to supplier advances).
n The company undertook capex of around Rs 420 mn in FY11 towards general
modernization and Greenfield capacity at Aurangabad. The company expects to
spend about the same in FY12. The company expects to exit the year with close
to 480000 engines pa capacity (360000 units in FY11) spread between
Aurangabad (old and greenfield) and Ranipet (110000 pa).
n The company's medium term objective is to move up into higher capacity engines
and tap greater share of OEM business. The LCV market is largely sub one
ton currently. As the market moved in the higher tonnage category, GCL would
be ready with its engine meeting the applicable emission norms.
n Although the company is not actively looking at acquisitions, but a reasonably
priced facility for manufacturing high precision engine components could be considered.
GCL makes single and twin cylinder engines currently. For graduating
into three cylinder engines, the company may look at acquiring technology.
Valuation
GCL is currently trading at 10.4x and 9.1x FY12 and FY13 earnings respectively. In
view of the strong set of numbers and adequate upside of 47% from current levels,
we maintain BUY on the stock with an unchanged DCF based price target of
Rs.110.


Outlook 2012 – end, bend or trend? Julius Baer Research Team

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2012 – end, bend or trend?
Long-term trends have dominated the past decade(s):
􀂃 Global 30-year bond bull market
􀂃 Global 10+ year equity bear market
􀂃 Global 10+ year commodity bull market
􀂃 Debasement of paper money (in mature markets, in particular) over ten years
The likelihood of these trends bending or reversing is rather limited given the fact that most
drivers are still in place:
􀂃 Slowing demographics
􀂃 Deleveraging of private and public households in mature markets
􀂃 Increasing trade flows on a global scale (globalisation)
We therefore think that any investment stance that goes against the trends outlined above
should be taken as a tactical rather than strategic position. For 2012:
􀂃 A temporary breather in the USD bear market and a normalisation of solid government bond yield
seem the most likely tactical countertrends, in our view
􀂃 An important low in equities may be reached, which should open opportunities into 2013

Electric Utilities Largest power consuming state hikes power tariff by 10% 􀂄BofA Merrill Lynch,

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Electric Utilities
Largest power consuming state
hikes power tariff by 10%
􀂄 India’s largest power consumer, Maharashtra, hikes tariff +10%
We reiterate our view that FY12/13 should be the years of big power tariff hikes
as state discos attempt to not only narrow losses but also repair balance sheets
by regularizing past dues (regulatory asset) on their path to sustainability. In 2011,
11 states accounting for ~35% of India’s energy consumption have hiked power
tariff by ~9-34%. Now, Maharashtra (MERC) has approved ~10% hike in power
tariff of the Maharashtra State Electricity Distribution (MSED), which covers 76%
of its FY11 revenue gap (loss) of Rs38.7bn (see Table 5). In sum, while the
present tariff hike is not enough to extinguish all the losses, this initiative should
fix discos balance sheets in 2-3 years without a tariff shock to consumers and
help kick-start capex. We now look for India’s biggest loss making state, Tamil
Nadu (TN), to hike tariffs during Dec-Jan 2012 by 20-30%.
Late but welcome! Tariff hikes stem losses, re-start capex
Maharashtra is the #1 power consuming state in India with MSED volume
accounting for ~9% of India’s FY12E estimated gross generation. Maharashtra
(MERC) has approved ~10% hike in power tariff of the MSED. This is after 11
states have hiked power by ~9-34%. Key tariff hiked during 2011 - Delhi 21%
(Read), Rajasthan ~24% (Read), Bihar 19%, Chhattisgarh 14%, Himachal 9%,
Jharkhand 19%, Punjab 9%, Orissa 20% (see Table 7 - Table 12) during 2011.
This should support a) kick-start not only to disco capex but also give
confidence to gencos to expand, b) buying of more power from merchant market
and c) repay bank loans on-time.
76% of FY11 revenue gap covered; past claims also allowed
MERC has provided interim relief to MSED of Rs32.6bn which covers 76% of its
FY11 revenue gap of Rs38.7bn and 21% of its FY11 arrears of Rs155bn.
Importantly, MERC has also allowed recovery of past dues worth Rs12.3bn
including the total revenue gap recoverable which would be Rs51bn. Hence, the
current hike covers 64% of total losses incl. past-claims. The relief is to be
recovered through an additional energy charge to be levied to all consumer
categories from Nov 01, 2011 for a period of twelve months (see Table 3).
Tamil Nadu – the next big bang reform!
We now set our sights on India’s biggest loss making state, TN, to hike tariffs by
Dec-Jan 2012 by 20-30%. This is getting delayed due to local body elections,
which is now out-of-the-way. We expect a three-way settlement i.e.
a) A large – 20-30% tariff hike,
b) Hike in Govt. subsidy by revising rate at which Govt. compensate for Agri /
subsidized consumption and
c) State govt to takeover some of past liabilities to clean-up the SEB balance    sheet.

Dabur India In line quarter; Expect stronger H2-FY12 􀂄BofA Merrill Lynch,

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Dabur India
In line quarter; Expect
stronger H2-FY12
􀂄 In line quarter; maintain estimates and PO
Dabur’s Q2 results were in line. While revenue was up 29% yoy and 3% ahead,
recurring PAT grew 8% yoy a tad below estimates. EBITDA margin declined
239bp yoy led by consolidation of international acquisitions of Hobi/ Namaste and
was 74bp below expected due to higher raw material costs. Post the quarter we
maintain estimates and retain Buy with an unchanged PO of Rs120.
Foods and international business post robust growth
Q2 saw 27.5% yoy revenue growth in foods led by sustained A&P support and
up-trading in the category. Company plans to build a fruit juice facility in Sri Lanka
to better service the South Indian market. International business grew robust
23%yoy mainly led by volumes (up 19%yoy). Key growth markets were Egypt,
GCC (each up 27%yoy) and Nigeria (up 36%yoy). Company continues to invest in
scaling up Hobi and Namaste through cross selling as well as capacity building.
Consumer care: volume growth to pick up in H2FY12
Consumer care posted a muted 8% growth (excl acquisitions) led by (1) supply
side constraints in toothpaste and digestives, (2) delay in institutional orders in
home care and (3) pending re-alignment of distribution in skin care and OTC/
ethicals. Growth is expected to revive in H2FY12 as these issues are addressed
along with (1) higher A&P support and (2) new launches across categories.
Retain Buy on valuations
Dabur now trades at one-year estimated forward P/E of 23x which is 10% lower
than its normalized 5 yr historical avg multiple. We believe the current multiple
can be sustained led by estimated 18% earnings CAGR and continuing pricing
power. Key risks: (1) unexpected increase in A&P spend, (2) raw material cost
pressures.

Sanghvi Movers Demand sluggish, margins retained; we maintain a Buy at lower PT : Anand Rathi

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Despite attractive valuations, the environment and outlook for Sanghvi
Movers is challenging. However, business from the wind-energy and
power sectors continues to grow, with fleet utilization up, to 84%.
Despite lower yields, it holds to plans for `2.3bn capex in FY12. We
retain a Buy but at a lower price target of `142 (earlier `194).
 Challenging environment; Sanghvi rethinks FY13 expansion. Due to
the recession, foreign competition is looking to hire out cranes in India,
at cheaper rates. Within India too, there have been delays in the execution
of power projects and a slowdown in steel and cement capacity build-up.
Sanghvi had bought 33 cranes for `1.5bn in 1HFY12, and is going ahead
with its planned `2.3bn capex for FY12. However, considering the current
challenging environment, it has not finalized FY13 capex.
 2Q revenue up 22.6%; margin maintained, profit down 40.8%. Sanghvi’s
2Q revenue growth was 22.6% yoy, in line with our estimate. Demand for
cranes continues in power and wind turbines, and resulted in 84% utilization
in 2Q for Sanghvi. The EBITDA margin was 71%, a 32bps yoy contraction,
in line with our estimate. During the quarter overtime revenue was 6.2% of
sales (~10% a year ago). Profitability was down 40.8% yoy, owing to one-offs
during the quarter. Adjusted for this, net profit was 14.4% lower.
 We introduce FY14 estimates. For FY14, we expect revenue growth of
6.3% over FY13, with capex of `1.2bn in FY14 (`1bn in FY13e). We
estimate 14.5% earnings growth in FY14 over FY13.
 Valuation. We lower FY12 and FY13 earning estimates 0.7% and 14.7%,
respectively, to factor in an expected demand slowdown. The stock trades at
5x FY12e and 4.5x FY13e earnings. We re-iterate a Buy. Risks: lower
demand, higher interest rates.

Must know: NSE trading Holiday List 2012

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Trading Members are hereby informed that the Exchange shall observe the following Trading Holidays during the Calendar Year January to December, 2012.


Sr .No
Holiday
Date
Day
1
Republic Day
26-Jan-12
Thursday
2
Mahashivratri
20-Feb-12
Monday
3
Holi
8-Mar-12
Thursday
4
Mahavir Jayanti
5-Apr-12
Thursday
5
Good Friday
6-Apr-12
Friday
6
Maharashtra Day
1-May-12
Tuesday
7
Independence Day
15-Aug-12
Wednesday
8
Ramzan Id
20-Aug-12
Monday
9
Ganesh Chaturthi
19-Sep-12
Wednesday
10
Mahatma Gandhi Jayanti
2-Oct-12
Tuesday
11
Dussera – Vijaya Dashmi
24-Oct-12
Wednesday
12
Bakri Id
26-Oct-12
Friday
13
Diwali Amavasya (Laxmi Pujan)*
13-Nov-12
Tuesday
14
Diwali Balipratipada
14-Nov-12
Wednesday
15
Gurunanak Jayanti
28-Nov-12
Wednesday
16
Christmas
25-Dec-12
Tuesday


* Muhurat Trading shall be held on Tuesday, November 13, 2012 (Diwali Amavasya – Laxmi Pujan)






LIC Housing Finance : 2QFY2012 Result Update: Angel Broking,

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For 2QFY2012, LICHF reported a sharp 58.0% yoy drop in its reported profit to
`98cr on account of one-off regulatory provisions of `205cr, primarily (`160cr)
related to standard assets. Individual disbursements remained strong at 24.6% yoy,
however NIM contracted by 48bp on a yoy basis. We recommend Neutral on the stock.
One-off regularity provisioning dents bottom line: For 2QFY2012, LICHF’s loan
book grew strongly by 29.3% yoy (6.1% qoq) to `56,098cr. During 2QFY2012,
individual disbursements (`4,736cr) growth was healthy at 24.6% yoy, however
overall disbursements (`5,148cr) increased by only 0.9% yoy as disbursements
related to projects (`412cr) declined by 68.3% yoy, mostly due to a high base
effect (`1,300cr worth project disbursements during 2QFY2011). LICHF’s loan
portfolio share to developers, which is generally higher yielding, have been on a
declining trend since the last 2-3 quarters, leading to slower rise in yield on
advances (11.0% in 2QFY2012 compared to 10.5% in 1QFY2012 and 10.0% in
2QFY2011) for the company. LICHF picked up loans worth `5,000cr from banks
during the quarter, leading to cost of funds shooting up by 84bp qoq to 9.5%
(rise of 162 bp yoy). Consequently, NIM for the quarter declined by 48bp yoy to
2.45%. The company made provisions of `205cr during the quarter to meet the
new regulatory norms of standard asset provisioning of 0.4% on individual loan
book and higher provisioning required for substandard assets. On the asset-quality
front, LICHF’s asset quality continued to be stable during 2QFY2012, with gross NPA
ratio declining by 10bp yoy to 0.64% and net NPA ratio declining by 9bp yoy to 0.1%.
Outlook and valuation: At the CMP, the stock is trading at a P/ABV multiple of
1.7x FY2013E of `126.0cr. Historically, the stock has traded at 0.8x–2.1x oneyear
forward P/ABV multiple, with a five-year median of 1.2x, but it has been
rerated over the past two years to 1.9x average. However, on account of the
prevailing high interest rates, we expect loan growth to slow down to 27% for
FY2012 and 23% for FY2013 (from 34.2% in FY2011) and spreads to be about
~33bp lower in FY2012 compared to FY2011. Also, unlike NBFCs regulated by
the RBI, CAR requirements for HFCs have not been increased by NHB.
Considering the near-term macro headwinds, regulatory overhang and
above-average valuations, we recommend Neutral on the stock.