Result Update: Petronet LNG Ltd, Divi's Lab, LIC Housing Finance, Allahabad Bank, United Phosphorus, NTPC, Glenmark Pharma: Emkay

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Result Update

Petronet LNG Ltd

Reco: ACCUMULATE

CMP: Rs 164

Target Price: Rs 180

Volume growth continue

·      Results were above our and street estimates at bottom line, mainly due to higher volume growth of 7.3% to 144.9tbtu during the quarter ·      EBIDTA margin declined marginally by 157bps YoY to 7.9% (-40.4bps QoQ), mainly on account of higher input cost and increase in other expenditure ·      Company is planning to setup 3rd LNG terminal at Gangavaram port, Andhra Pradesh, with the total capacity of 5mntpa, While Kochi terminal will start from end of CY12 ·      The recent news on proposed cap on gas marketing margin which is to be decided by PNGRB would keep the stock under pressure until any clarity emerges. Maintain accumulate with TP of Rs.180

Divi’s Lab

Reco: BUY

CMP: Rs 818

Target Price: Rs 927

Subdued quarter, Growth story remains intact - Maintain Buy

·      Divi’s Q3FY12 performance was below expectations with (a) Revenue at Rs4.2bn (up 33% YoY); (b) EBIDTA at Rs1.5bn (up 22% YoY)  & (c) PAT at Rs1.23bn (up 21% YoY) ·      Top-line growth was aided by INR depreciation, which contri-buted 13% to the top-line growth. Capacity utilization at Vizag plant remained flat QoQ, expected to scale up from Q1’13 ·      EBITDA margins at 36.2% were lower than expectations in spite of INR depreciation led by increase in expenses due to commissioning of Vizag plant & higher proportion of API sales ·      Growth story remains intact – Maintain Buy with a target price of Rs927 on the stock (20x FY13 EPS of Rs46.3)

LIC Housing Finance

Reco: HOLD

CMP: Rs 246

Target Price: Rs 250

Unfavorable base and shrinking spread take toll

·      LICHF’s Q3FY12 NII (Rs3.3bn) and APAT (Rs2.5bn) below our expectations. Lower than expected numbers driven by sharper 20bps contraction in NIMs ·      Individual disbursements at 8.4% yoy, due to unfavorable base effect. However, mgmt still confident of 20% growth in disbursement implying 27% yoy growth in Q4FY12 ·      NIMs at 2.3%, down 20bps qoq (est 12bps). Provisions write back (Rs780mn) helps as RPAT grows 45%. However, PCR dips back to 51%. ·      Intended QIP and teaser rate loan provisions, key upside risk to our numbers. Valuations have seen sharp run up to 2.4x/1.9x FY12E/FY13E ABV. Recommend Hold

Allahabad Bank

Reco: ACCUMULATE

CMP: Rs 156

Target Price: Rs 200

Strong performance; aggressive provs add comfort

·      ALBK results ahead of estimates with NII at Rs13.8bn (est Rs12.7bn). Net profit at Rs5.6bn (est Rs5.6bn) further aided by higher trading gains and lower tax rate of 8% ·      Strong NII growth (31.3%yoy) driven by stable NIMs vs our exp of 20bps dip. Advances grew 5% qoq in line with expectations ·      Slippages at Rs5.9bn vs our est of Rs5.5bn. However, fresh restructuring of Rs10.5bn was a –ve surprise. Net stressed asset stand at 4.8% of advances vs 3.8% in Q2FY12 ·      Upgraded FY12E/FY13E numbers by 17.7%/12.2 for largely lower tax rate. Aggressive provisioning policy provides comfort. Remains our top pick amongst mid-size PSU banks

United Phosphorus

Reco: BUY

CMP: Rs 144

Target Price: Rs 200

Bottomline disappoints, downgrade estimates

·      Q3FY12 revenues / EBITDA were above est driven by currency impact however higher tax outgo squeezed APAT at Rs 1.15bn,4% yoy, below est of Rs 1.5bn ·      58%yoy growth in sales is primarily driven by recent acquisitions in Brazil (~25%) and exchange fluctuation (19%) while organic volume growth remains muted at ~6%  ·      Despite higher revenue growth, EBITDA margins remain subdued at 18.1%. Higher tax rates at 33% and losses from Brazilian JV (SIPchem) suppressed PAT growth at mere 4% ·      Downgrade FY12/13 est by 10%/7% to Rs 16 / 19.9 and subsequently downgrade price target to Rs 200 (10xFY13 EPS), however maintain BUY due to attractive valuations

NTPC

Reco: BUY

CMP: Rs 172

Target Price: Rs 204

90%+ PAF structurally coming down; maintain Buy

·      3Q12 PAT of Rs21.3bn is below est. due to higher R&M expenses & under recovery on water charges. Adjusted net profit stood at  Rs21.7bn (assuming PY sales as recurring) ·      Has commissioned 1320MW (Sipat) and commercialized 1,160MW in YTD12. Mgmt has retained its capacity addition target ·      Highlights - (1) PAF of coal plants low at 85.3% and 86.2% for 3Q12 and 9M12 period and (2) Revised PAF and COD assumption, FY12E/FY13E EPS reduced by 3.4%/3.9% ·      Valuations still remain reasonable. Positives to continue (1) COD of another 1160MW, (2) FY12/13 grossing & (3) acquiring distressed plants in medium term. Maintain Buy;

Glenmark Pharma

Reco: HOLD

CMP: Rs 312

Target Price: Rs 360

Margins under pressure – Downgrade to Hold

·      Q3FY12 Results - Revenues at Rs10.3bn (up 38%YoY), b) Adj. EBITDA at Rs1.8bn (up 35% YoY), and c) APAT at Rs1.33bn (up 41% YoY) ·      Revenue growth was driven by 11% in India, 56% in US, 58% in Europe and 48% in Latam ·      Despite INR dep. by 13%, gross margins declined 300bps YoY & 120bps QoQ due to higher growth in Latam, Europe, US where margins are lower and lower growth in high margin India business ·      On account of near term growth pressure in India business & margin pressure overall, we downgrade the stock to Hold with a TP of Rs360 (15x FY13 Base EPS of Rs21+ Adj NPV of Rs47)

Auto Sales Update - New year starts on a positive note :: Edelweiss

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Despite weak consumer sentiments, Maruti and Hero posted growth which, in our view, was aided by inventory building with dealers. Tractor sales disappointed while commercial vehicles sales continued to post strong numbers, ahead of our expectations. We prefer an early interest rate cycle play and Maruti Suzuki is our top pick in the sector. 

Cars: Maruti returns to growth

Maruti reported a YoY growth of 5.2% to 115,433 units (15% above our estimate). In our view, the company took advantage of the low inventory with dealers posting strong retail sales in Dec’11. Launch of new Dzire, Ertiga and higher availability of diesel engines should support the momentum going forward. Tata Motors also showed a healthy 15% YoY growth. Among others, Ford and General Motors posted a decline in sales growth while players with new launches like Hyundai and GM saw growth.

Two wheelers: Hero continues sales push

Hero continued to defy the industry trend and grew by 11.5% YoY to 520,272 units (in line). This was exactly opposite to the recent feedback we got from dealers on retail sales which suggested a slowdown and an inventory build-up. Sales growth of TVS Motors’ two wheelers slowed down to 5%.

Commercial vehicles: March continues

Tata Motors reported another month of strong performance for commercial vehicles. Despite the high base and slowdown in haulage segment, MHCV sales grew by 11% whilst LCV grew by 15% YoY. Easing liquidity, softening interest rates and bank willingness to lend could help improve sentiments and sales performance in H2FY13.

Tractors: Rural slowdown takes a toll

Finally, the rural slow down has started to affect tractor sales. This is the third consecutive month of disappointment. M&M posted a decline in tractor sales (down 5.6% in Jan’12). The company clarified that this was due to inventory correction (3-4 weeks).

Maruti Suzuki is our preferred stock to play the early recovery in interest rate cycle. Sales should benefit from new launches while margins from an improved product mix. We have a BUY rating on the stock with a TP of INR1,350 .

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STOCK IDEA Gateway Distriparks :: ShareKhan

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STOCK IDEA

Gateway Distriparks
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs173
Current market price: Rs131

Ahead of the pack

Key points 

• Evolving as an integrated player: With its dominant presence in the container freight station (CFS) segment and forays into the rail freight and cold chain businesses Gateway Distriparks Ltd (GDL) has evolved as an integrated logistic player. The proposed capex planned in all three segments will strengthen its presence in each of the segment and increase its pan-India presence. 
• CFS-a steady cash cow business: GDL is one of the largest CFS players in India with a capacity of about 450,000 TEUs operating at four locations. The CFS business is the company's dominant business and contributed about 68% to its EBITDA in FY2011. Growing steadily the business has reached a stage where it continues to generate cash that can be utilized to not only grow the same business but also for investment in other businesses of cold storage and rail container freight. The CFS business is likely to remain the cash cow for GDL as it has high margins and very low debt on its books. Besides, the working capital requirement is not high in this business. Capacity expansion will further strengthen GDL's position in the CFS space. 
• Foray into rail freight adds to the value chain, time to reap fruits: GDL ventured into the rail freight business in 2007 after the government opened the sector to the private players. Despite its capital intensive nature the business managed to break even in Q3FY2011 even though GDL's competitors in this field are still struggling. Today, GDL has emerged as the country's second largest container rail freight operator after Concor and largest private player. It owns and operates a fleet of 21 trains from its three inland container depots (ICDs) and plans to increase its capacity further in terms of both rakes and ICDs. With its Faridabad ICD ready to become operational in a month and more rakes coming in, the business is going to fuel its growth over the coming years. We expect GDL's revenue and net profit to grow at 17% and 11% CAGR respectively over FY2012-14.
• Buy with price target of Rs173: We like GDL since it has evolved as an integrated logistic player. Its CFS business is a cash cow while its investments in the rail and cold storage businesses have started bearing fruits. The expansion in all the business segments would boost the earnings and support the valuations. The stock currently trades at 10.5x and 9.7x its FY2012E and FY2013E earnings. Using the DCF method we have valued all the three divisions, assigning values of Rs139 to the core CFS business Rs22 to the rail freight business and Rs12 to the cold storage venture. We thus arrive at a total value of Rs173. At our price target, GDL shall trade at 12.8x its FY2013E earnings, which is lower compared to its five-year average PER of 13.5x. We, therefore, recommend a Buy on GDL.

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Hold Glenmark Pharma; target of Rs 364: Nirmal Bang

Nirmal Bang has recommended hold rating on Glenmark Pharma with a target of Rs 364, in its February 1, 2012 research report.
"Glenmark Pharma reported results below than expectations due to high forex loss and adverse change in sales mix Sales (excluding out-licensing income) grew by 7.5% qoq and 32.8% yoy at Rs 1007.5 cr. The company received out-licensing income of Rs 23.8 cr during the quarter as compared to 118.5 cr in Q2FY12. Core EBITDA margin (adjusted for forex loss and out-licensing income) has declined to 18.0% from 20.5% in Q2FY12 and 23.0% in Q3FY11."
"During the quarter the company reported forex loss of Rs 102 cr (MTM on foreign currency loans) which negated the healthy sales growth of 32.8% yoy. EBITDA margin has declined due to lower contribution of high margin business like India (grew by 12.8% yoy in 9MFY12), US (42%) and higher contribution by low margin business like SRM (48%), LatAm (55%). High R&D cost also affected the EBITDA margins during the quarter. The company spent Rs 76 cr on R&D in Q3FY12 i.e. 7.5% of sales as compared to 6.9% in Q2FY12 and 4.6% in Q3FY11. Company has indicated of spending Rs 75 cr in Q4FY12 taking the full year figure to Rs 261 cr as against the earlier guidance of Rs 200 cr. Management has indicated that one of the reason for subdued performance of India business was inventory rationalization to reduce accounts receivable (which came down to 116 days from 125 days earlier). Management has indicated that going forward margins would improve from here onwards especially from FY13 onwards EBITDA margins are expected to improve substantially on year on year as the company is currently focusing on growth at the cost of margins."
"We believe that major headwinds are factored in the price. With future triggers like improving margins, positive sales mix and better balance sheet position, we expect company to report better numbers. At CMP the stock trades at 20.8x FY12E and 13.3x FY13E. We believe the stock is available at attractive valuations. We are rolling our price target o FY13E. Based on our EPS of Rs 22 for FY13E target price comes to Rs 364 (earlier Rs 358). We maintain our HOLD rating on the stock," says Nirmal Bang research report.

Ipca Laboratories Ltd Reco: BUY CMP: Rs 299 Target Price: Rs 420 :gepl

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Ipca Laboratories Ltd

Reco: BUY

CMP: Rs 299

Target Price: Rs 420

Solid performance, Upgrade estimates – Maintain Buy

·      IPCA’s Q3FY12 results were in-line with expectations with a) Revenues at Rs6bn (up 30% YoY), b) EBITDA at Rs1.5bn (up 66% YoY) and c) APAT at Rs1bn (up 88% YoY)

·      Revenue growth was led by strong growth in exports aided by INR dep. Domestic business continues to struggle but is expected to recover & grow by 13-15% in Q4’12E & FY13E

·      Gross and EBITDA margins improved by 235bps and 550bps YoY to 61% and 25% respectively led by INR dep and strong uptake in institutional business which is expected to continue going forward

·      On back of strong results and expected USFDA approval for Indore facility, we revise earnings upwards by 18%/ 7% for FY12/13E. Re-iterate Buy with a revised target of Rs420 (14xFY13 EPS)

Hold Indian Hotels; Target :Rs 70 ::ICICI Securities

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H i g h e r   s u p p l y   k e e p s   c h e c k   o n   o c c u p a n c y…
Indian Hotels Company (IHCL) came out with its Q3FY12 results wherein
the company reported standalone net revenues of ~| 521.5 crore (up
~7.4% YoY) in line with our estimate of | 518.5 crore. However, the PAT
of | 50.5 crore (vs. profit of | 50.3 crore in Q3FY11) was a bit below our
estimate of | 58.7 crore mainly on account of a squeeze in margins and
some exceptional losses. The operating margin dipped by 270 bps YoY to
27.0% mainly on the back of a rise in employee, raw material and other
cost  by  16%,  10%  and  9%  YoY,  respectively. Besides this, the company
also incurred an exceptional loss of | 14.8 crore (i.e. notional forex loss of
| 6.8 crore on forex loans due to adverse currency movement and a
shortfall in interruption claim of | 8.0 crore). As a result, its net profit
growth remained flat compared to last year.
ƒ New room additions and marginal rise in occupancy drives topline
IHCL increased its room count by ~10% YoY in Q3FY12. This, along
with a marginal rise in occupancy, has led to topline growth of
~7.4% YoY to | 521.5 crore on a standalone basis. Among regions,
cities such as Goa, Mumbai and Hyderabad recorded higher growth
in RevPAR whereas a drop in ARRs was visible in Chennai and Delhi.
The slowdown in recovery was primarily due to oversupply of
rooms particularly in Delhi, Chennai, Hyderabad, Bangalore and
Pune. Mumbai was the only metro, which showed an improvement
in occupancy (OR) albeit with flat room rates.
ƒ Higher operating costs dent operating margins
IHCL’s operating profit declined  by 2.5% YoY to | 140.7 crore as
operating cost remained at a higher level with 11.6% YoY growth at
~| 380 crore. Among major cost  drivers, raw material, employee
and other costs surged by 16%, 10% and 9% YoY, respectively.
V a l u a t i o n s
We have lowered our FY13E target multiple factoring the risk of delayed
recovery on the international business front and supply pressure on the
domestic side. We value the stock at 10x FY13E EV/EBITDA (earlier
valued at 12x) and arrive at a target price of | 70 with a HOLD rating

LIC Housing Finance Ltd has announced its Q3FY12 result:: Microsec

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LIC Housing Finance Ltd has announced its Q3FY12 result. The company’s top line increased by 5.10% QoQ and 30.95% YoY to Rs 1588.52 crore, while bottom line increased by 210.66% QoQ and 43.19% YoY to Rs 305.69 crore, mainly because of reversal in excess provision of Rs 79 crore. In the third quarter, the company sanctioned and disbursed loans worth Rs 6009 crore (Rs 5302 crore) and Rs 4568 crore (Rs 4215 crore) respectively. Disbursement in the developer loan segment were lower at Rs 154 crore against Rs 411 crore for the corresponding period last year.

LIC Housing Finance Ltd Q3FY12 result

Particulars	Q3FY12	Q2FY12	Q3FY11	QoQ(%)	YoY(%)
Net Sales & other operating income	1588.52	1511.48	1213.12	5.10%	30.95%
Operating Profit(Excluding OI)	324.28	333.4	349.31	-2.74%	-7.17%
OPM(%)	20.41%	22.06%	28.79%	-164.39	-838.04
PAT	305.69	98.40	213.49	210.66%	43.19%
PAT(%)	19.24%	6.51%	17.60%	1273.35	164.53
Diluted EPS	6.44	2.08	4.50	209.62%	43.11%
All data in Crores , EPS Represents Diluted EPS.

Regards,

Team Microsec Research