07 February 2012

Result Update: Thermax, Madras Cement, Berger Paints, Dr. Reddy's Lab ::Emkay

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Result Update

Thermax
Reco: HOLD
CMP: Rs 522
Target Price: Rs 495
Earnings Overhang; Downgrade to Hold
·      Below estimates – (1) Revenue up 2% yoy to Rs12.7 bn (2) EBITDA% down 110 bps yoy to 10.7% (3) EBITDA down 7% yoy to Rs1.4 bn (4) APAT down 5% yoy to Rs955 mn
·      Order inflows decline 42% qoq to Rs7.5 bn – lower than quarterly run-rate of Rs12 bn. Order book declines 11% qoq to Rs58 bn and order book cover deteriorates to 1.0X revenues
·      Running weak order cover at 1.0X Revenues and ambiguity on near-term order inflows; Also investments in super-critical venture remains an overhang
·      Cut earnings by 7% and 11% for FY12E and FY13E on reduced order book visibility. No near term re-rating catalysts + risks to earnings exist. Downgrade to Hold with target of Rs495


Madras Cement
Reco: HOLD
CMP: Rs 129
Target Price: Rs 138
Lower costs drive profit beat
·      MCL 3QF12 EBITDA at Rs2.07bn (+40% yoy) significantly ahead of our & street est led by lower RM cost (-3% qoq) & P&F costs (-0.6% qoq). Lower interest & depreciation charge further drove net profit beat (Rs768 mn vs est of Rs392 mn)
·      Volumes up 14.6% yoy while realizations up 13% yoy (Rs4314/t) fuelled 29% yoy growth in cement sales at Rs7.3  bn. EBIDTA/t at Rs1175/t grew by a handsome 28.7% yoy
·      Upgrade FY12/13 EPS by 33%/14% led by better realizations & lower depreciation & interest outgo. Revise target to Rs138 (Rs125 earlier) to factor in earnings upgrade
·      MCL continued is earnings surprise led by firm cement prices. We believe next surprise has to be volume led (south price at Rs290/bag seems to have peaked out) for which sustainable uptick in southern cement demand remains key. Retain HOLD


Berger Paints
Reco: ACCUMULATE
CMP: Rs 100
Target Price: Rs 109
Core argument intact, Retain Accumulate
·      Berger Paints report 22% yoy growth in standalone APAT to Rs449 mn on expected lines; Lower Ebidta margins (down 50 bps to 9.6%) get offset by strong volume (12-13%)
·      Poland and Nepal operations report Ebidta margin pressure; Consolidated APAT at Rs491 mn was Rs20 mn lower then expectations of Rs514 mn
·      Eyeing price increase in industrial and decorative portfolio in Q4FY12; Would regain Ebidta margins in FY13E
·      Retain our FY12E and FY13E EPS of Rs 5.1/share and Rs 6.2/share, respectively. Maintain ACCUMULATE rating with target price of Rs 109/share


Dr. Reddy’s Lab
Reco: HOLD
CMP: Rs 1,671
Target Price: Rs 1,650
Para-IV Upsides Priced-in - Maintain Hold
·      Q3FY12 Results – Revenues at Rs2.77bn (up 46%YoY), b) EBITDA at Rs8.7bn (up 129% YoY) and c) APAT at Rs4.9bn (up 82% YoY)
·      Zyprexa contributed USD99mn, excluding this base business grew 22% YoY led by US biz which grew by 29% & INR dep
·      Base biz margins were flat YoY and declined 110bps QoQ led by flat growth in Russia and lower benefit from DEPB. APAT declined 10% YoY and  18% QoQ to Rs2.5bn
·      Going forward, even though lot of Para-IVs are lined up for launch in US, upsides are largely priced in. Unless there is an improvement in base biz, we continue to maintain Hold rating with a price target of Rs1650

Cement stocks post concrete gains Ø CSEC Research

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Cement stocks post concrete gains

Ø    The S&P CNX Nifty opened in green, traded around 5,390 mark in the morning session. Profit booking was witnessed during mid afternoon session while Nifty managed to close in green at 5361.

Ø    Cement stocks posted concrete gains. Indian cement rallied on the back of strong Q3 numbers. Cement Majors ACC and Ambuja Cement witnessed buying interest as these stocks posted 5 percent gains.

Ø     Result impact was witnessed in Hindustan Unilever. The stocks dipped 3 percent during the fag end of trade despite Q3 beating street estimates.

Ø    Dhanlakshmi Bank declined on the back of the media reports that the companies MD Amitabh Chaturvedi is likely to resign. Meanwhile the company intimated after market hours that the organization has decided to witness change of guard at the tope level.
Outlook

Ø       U.S. Indices retreated from multi-year highs as Greece struggled for an agreement on spending cuts needed to ensure another round of rescue funds.

Ø      In today’s trade baring Nikkei and Shanghai, all other Asian indices are trading in a green. SGX Nifty is trading 1/3rd of the percent higher, indicating a positive opening
 
Regards,
CSEC Research

January effect takes over ::CSEC Research

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January effect takes over
January saw the markets making a comeback, this after a couple of months of decline. Buying interest saw the markets recovering ~77% of the losses since October. The BSE Sensex closed with a gain of 11.2% while S&P CNX Nifty closed with a gain of 575 points at 5199. Buying interest was witnessed in lower rung stocks with the BSE Midcap and BSE Smallcap indices closing with gains of 14% and 17% respectively.  The rally appears to have come on the back of months of selling pressure. Typically such a rally characterises a phenomena known as January effect. The S&P CNX Nifty broke its January losing streak since January 2008, the index further went on to record its highest gains since 1996.  

Steam still left in private sector banking stocks

Despite a tight liquidity environment debt markets are discounting peaking of interest rates. The RBI’s status quo on policy rates was a dampener; however, the RBI is likely to adopt a pro-growth policy stance contingent on inflation, hovering within the RBI’s comfort zone.

After two fiscals of strong growth, the current fiscal (FY12) has been a challenging one. December results were below expectations for quite a few companies; however, sales growth was largely along expected lines. Frontline IT stocks – Infosys and TCS - went through earnings upgrades in the recent weeks, while Wipro and most of the remaining Sensex stocks were subject to earnings downgrades. At 17,600, the Sensex is trading at 13.7X FY13 earnings estimates.  

Along expected lines FMCG companies reported margin improvement. However, stocks in this space have gone through only a moderate correction investors would be better off sticking to large and midcap stocks in the FMCG space. Considering the deferment in rate cut and the significant rally; stocks with high-leverage, typically infrastructure, shipping and real estate need to be given a go-by. Bogged down by asset quality and capital adequacy concerns under Basell III the financial space had gone through a sharp correction. Despite the rally, banking stocks in the private space appear attractive. PSUs with a strong cash position may also be considered as investment avenues.
 
Regards,

CSEC Research

FII DERIVATIVES STATISTICS FOR 07-Feb-2012

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FII DERIVATIVES STATISTICS FOR 07-Feb-2012 
 BUYSELLOPEN INTEREST AT THE END OF THE DAY 
 No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
INDEX FUTURES815372174.30555951481.3554919614639.61692.95
INDEX OPTIONS63980116894.7764243816972.05142601338026.20-77.28
STOCK FUTURES1043022957.831082643065.46100168528351.67-107.63
STOCK OPTIONS24303676.0624076670.05491231387.356.01
      Total514.05

 


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Hold Tata Teleservices Maharashtra; Target :Rs 15 :: ICICI Securities (pdf link)

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CLICK here for PDF post link



S u b s c r i b e r   b a s e   r e d u c e s ;   a   m a j o r   c o n c e r n…
Tata Teleservices Maharashtra’s (TTML) consolidated numbers for
Q3FY12 were in line with our expectations on the topline front but
disappointed on the bottom line front. The topline stood at | 630.6 crore
against our estimate of | 626.6 crore, growing 9.2% YoY and 2.3% QoQ.
EBITDA for the quarter stood at | 132.9 crore against our estimate of
| 147.2 crore, de growing 4.9% QoQ on the back of | 13.3 crore of
provisions provided for contingencies against the companies primarily
related to DoT. The EBITDA margin stood at 21.1%, falling 160 bps QoQ.
The company reported a loss of | 144.6 crore against our estimate of
| 98.4 crore primarily on account of higher than expected interest cost,
which included a forex loss of | 11.2 crore.

Highlights of the quarter
While revenues grew 2.3% QoQ, the wireless subscriber base fell
drastically from 16.8 million in Q2FY12 to 14.8 million in Q3FY12
representing a fall of 12.2%. The wireline subscriber base, however, grew
by 1.7% to 0.8 million. The EBITDA margin contracted 160 bps QoQ to
21.1%, primarily due | 13.3 crore of provisions for contingencies against
the company by DoT. However, a sliver lining for Q3FY12 was the share
of VAS at 32% based on higher usage of Tata Photon.
V a l u a t i o n
A decline in the subscriber base in this quarter is a major concern. We
expect the topline to grow at 3.9% CAGR over FY11-13E. However, the
net loss is expected to increase to | 454.2 crore by FY13 from positive
PAT of | 80.2 crore in FY11 (on account of sale of the tower company for
| 865.4 crore). Valuing the company at a 35% discount to Airtel at 1.2x
FY13E sales, we have arrived at a target price of | 15. At the CMP of | 16,
the stock is trading at 1.2x FY13E sales. Our target price of | 15 implies a
downside of 5%. We have downgraded the stock from BUY to HOLD.

7/2/2012 :BSE, Bulk deals,

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Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
7/2/20125121618K Miles SoftwareCOMFORT INTECH LIMITEDS10000057.00
7/2/2012531560Aroma EnterprisesAARAV FINANCIAL SERVICES PRIVATE LIMITEDB5490010.30
7/2/2012531560Aroma EnterprisesADROIT TRADE LINK PVT LTDS4900010.30
7/2/2012590114Arunjyoti EnterprisesVENKAT NARESH MAJETIS4105026.33
7/2/2012505029Atlas CycleCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB16433361.31
7/2/2012505029Atlas CycleCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS16433361.47
7/2/2012502219Borosil GlassBOROSIL GLASS WORKS LIMITED BUY BACKB27203850.00
7/2/2012511243CHOLAFINFNIL A/C COPTHALL MAURITIUS INVESTMENT LIMITEDB843750160.00
7/2/2012512199Core ProjectsBLACKSTONE ASIA ADVISERS L.L.C. A/C THE INDIA FUND INCS593000265.18
7/2/2012531270Dazzel ConfSURESHBHAI P PARMARS11292384.28
7/2/2012531470EMPORISDIPAL VIRENDRAKUMAR PATELB10010050.10
7/2/2012526532Essen SuppABHA SULTANIAS5300059.24
7/2/2012531055GFLFINCHIRAG DINESHKUMAR SHAHB3500035.20
7/2/2012531055GFLFINSAMMANITA FASHIONS PRIVATE LIMITEDS3374935.20
7/2/2012532617Jet Air IndiaCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB807875331.74
7/2/2012532617Jet Air IndiaA K G SECURITIES AND CONSULTANCY LTDB534124333.33
7/2/2012532617Jet Air IndiaA K G SECURITIES AND CONSULTANCY LTDS534124333.61
7/2/2012532617Jet Air IndiaCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS807875331.94
7/2/2012532642Jindal SouthCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB149359809.86
7/2/2012532642Jindal SouthA K G SECURITIES AND CONSULTANCY LTDB124630826.06
7/2/2012532642Jindal SouthCHANDARANA INTERMEDIARIES BROKERS PRIVATE LIMITEDB60151826.58
7/2/2012532642Jindal SouthCHANDARANA INTERMEDIARIES BROKERS PRIVATE LIMITEDS59362826.91
7/2/2012532642Jindal SouthA K G SECURITIES AND CONSULTANCY LTDS124630826.49
7/2/2012532642Jindal SouthCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS149379807.90
7/2/2012530165Kanchan IntlSLP TRADERS (SATISH VASANT GHONE )B3000093.95
7/2/2012530165Kanchan IntlSURESH LAXMAN PATILS3000093.95
7/2/2012532901Koutons RetlVORA FINANCIAL SERVICES PRIVATE LIMITEDB37418117.90
7/2/2012532901Koutons RetlVORA FINANCIAL SERVICES PRIVATE LIMITEDS21254617.72
7/2/2012502157Mangalam CemCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB143426146.52
7/2/2012502157Mangalam CemCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS143426142.46
7/2/2012532986Niraj CementMILKWAY MERCANTILES PRIVATE LIMITEDB7970623.26
7/2/2012532986Niraj CementMILKWAY MERCANTILES PRIVATE LIMITEDS7496523.13
7/2/2012511734Pasupati FinAMIT KRISHNAKANT THAKKERS4000032.65
7/2/2012505530Prism InfoVINOD RATILAL SHAHS7746827.87
7/2/2012590077Ranklin Sol-$D V DURGAMS5346610.99
7/2/2012590077Ranklin Sol-$RAGHU CHEKKAS3010010.97
7/2/2012511585Regency TrustJETHALAL KHATAU THACKERB7500044.16
7/2/2012531866Subhkam CapM S VINOD KUMAR JAINB35363110.00
7/2/2012517534SV ElectricalsALANKRIT RETAILS PRIVATE LIMITEDS1250009.15
7/2/2012531831Unisys SoftMOONSTAR SECURITIES TRADING & FINANCE CO P LTDS150000149.04
7/2/2012511431Vakrangee Soft-$VAKRANGEE HOLDINGS PRIVATE LIMITEDB150000409.00
7/2/2012511431Vakrangee Soft-$DINESH BIRDILAL NANDWANAS150000409.00
* B - Buy, S - Sell
** = Weighted Average Trade Price / Trade Price