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Result
Update
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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
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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
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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;
·
· 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
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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
· 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
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