13 February 2013

Eros international Media Ltd :: Team Microsec Research


Dear Sir/Madam,
Eros international Media Ltd (Eros) announced its consolidated Q3 FY2013 results on 12 February 2013. While the company’s top line came in line with Bloomberg Consensus estimates, it slightly lagged our estimates. However, Eros’ bottom line came in line with our, but significantly above street estimates. A glimpse of the company’s quarterly performance vis-à-vis comparable quarters and estimates is as follows:
Eros’ revenues decreased 9.6% y-o-y to `369.3 Crores whereas its net profits contracted 6.4% y-o-y to `65.2 Crores in Q3 FY2013. The decline in top and bottom line were on expected lines as the year ago quarter included three of the country’s top five grossing movies’, including Ra One, performance, which were held in Eros’ portfolio, in its financials. However, the company reported better than expected profits on account of lower than expected finance costs and tax outlays. During the quarter, Eros’ performance was aided by successful releases of ‘English Vinglish’, ‘Son of Sardar’, ‘Maatraan’, ‘Thuppaki’, and ‘Khiladi 786’. Furthermore, overseas performance of ‘Dabangg 2’ supported its performance in Q3 FY2013. The company also launched two premium HD channels under its collaboration with HBO to garner benefits of digitization. Moreover, Eros offloaded 2.8% stake during the quarter to align its promoter shareholding with the SEBI guidelines. Added to that, the company announced an interim dividend of `1.5 per share to reward its shareholders.
Going forward, Eros is likely to come up with releases of ‘Attacks of 26/11’, ‘3G’, ‘Warning (3D)’, and ‘Go Goa Gone’ during Q4 FY2013E. Including these movies, the company has strong movie pipeline for next 24 months. Some of the key titles in the upcoming releases include ‘Ram Leela’, ‘Kochadaiyaan’, ‘Tanu weds Manu Season 2’, ‘Sarkar3’, ‘Rana’, ‘Ye Jawani Hai Diwani’, ‘Krrish 3’, and ‘Bajirao Mastani’. With strong movie pipeline and deals with HBO and Endemol, Eros is likely to keep reporting sustainable growth in its top and bottom line in the upcoming quarters as well. We continue to rate the company a BUY with a target price of `326 per share.

Regards,

Team Microsec Research


FII & DII trading activity on NSE, BSE and MCX-SX 13-02-2013

CategoryBuySellNet
ValueValueValue
FII3209.042408.73800.31
DII966.341256.03-289.69

 


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FII DERIVATIVES STATISTICS FOR 13-Feb-2013

FII DERIVATIVES STATISTICS FOR 13-Feb-2013 
 BUYSELLOPEN INTEREST AT THE END OF THE DAY 
 No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
INDEX FUTURES421721261.95371251110.012908958679.13151.94
INDEX OPTIONS2490707446.962279876801.70163310148576.25645.26
STOCK FUTURES648572026.33351021114.8299002830269.02911.50
STOCK OPTIONS439311299.30447731318.80961102786.98-19.51
      Total1689.19

 


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Direct plan rules across fund houses :: Business Line


This is the concluding part of a three-part series on Direct plan and the FAQs below are based on the general rules followed across all Fund houses.
However, some of the applicability may vary from Fund to Fund and hence SID/KIM/Addendums issued by the Asset Management Companies or their Web sites can be referred to for more, and latest, details.
I have an investment in the existing/regular plan which is not routed through any distributor. Will the future dividend reinvestments take place automatically in the Direct plan?
No. Dividend reinvestments will take place in the existing/regular plan even though the investment is not routed through the distributor.
However, if you request for the conversion from regular/existing plan to Direct plan, then all future dividend reinvestments after conversion will happen only under the Direct plan.
If I want to convert my investments, which were not done through the distributor, from the existing/regular plan wherein exit load period is still in force, will the exit load be deducted at the time of conversion (switch) to Direct plan?
No. The exit load will not be deducted at the time of conversion (switch).
However, the exit load will be deducted if the units are redeemed/switched-out from the Direct plan before the exit load period is over.
The age of the exit load will be from the date of investment in the existing/regular plan. As the exit load applicability may vary from fund to fund, you may refer to the Addendums issued by the Asset Management Companies or their Web sites for more details.
If I want to convert my investments which were done through the distributor from the existing/regular plan wherein exit load period is still in force, will the exit load be deducted at the time of conversion (switch) to Direct plan?
Yes. The exit load will be deducted at the time of conversion (switch) itself.
After conversion, for any further switch or redemption from the Direct plan, no exit load will be deducted even if the exit load period is not over.
As the exit load applicability may vary from fund to fund, you may refer to the Addendums issued by the Asset Management Companies or their Web sites for more details.
I have a dividend transfer plan (DTP) in the existing/regular plan and also a special product of STP which was launched by AMCs based on appreciation/reverse switch. Both these plans are not routed through the distributor.
Will the future instalments of DTP and also the future instalments of the special STPs be converted into Direct plan automatically?
As the guidelines in this regard vary from Fund to Fund, you may refer to the Addendums issued by the Asset Management Companies or their Web sites for more details.
My current investments in MF are in demat form. If I wish to make additional purchase in the same folios under Direct plan and hold it in non-demat form, will I be able to do so ?
Yes. You can purchase additional units in the same folio under Direct plan and hold the units in non-demat form.
(Contributed by CAMS Viveka, an Investor Education Initiative from CAMS. Views expressed are general practices in the MF industry and may vary on a case-to-case basis).

JAIN IRRIGATION Subdued quarter, optimistic outlook:: Edelweiss


Jain Irrigation Systems (JISL) posted an adjusted PAT, below estimates,
owing to a steep decline in MIS (17.5% down YoY) and lower EBITDA
margin. The management is confident to achieve positive sales growth in
Q4FY13 (vs decline for past four consecutive quarters) and 20% YoY
growth in MIS during FY14. Further, recent fund raising will lead to lower
interest outgo by INR0.8bn-INR1bn in FY14. We believe that JISL’s MIS
business is likely to stabilize and show positive growth in coming
quarters including an improved balance sheet. We maintain ‘BUY’
MIS business growth tempered to improve balance sheet
Net sales dipped 7.4% YoY owing to a steep decline of 17.5% YoY in MIS business
primarily on account of JISL’s focus on improving balance sheet. EBITDA margin fell
590bps YoY and 300bps QoQ to 16.5% primarily on account of 1) higher raw material
cost 2) higher power and fuel cost and 3) lower contribution of better margin business
i.e MIS. Adjusted PAT was down 64.9% YoY to INR254mn vs our estimate of INR425mn.
Key highlights
• JISL maintains its guidance for positive sales growth in Q4FY13 (vs decline for past
four consecutive quarters) and 20% YoY growth in MIS during FY14.
• MIS receivable down to INR13.2bn (from INR17.2bn in March 31, 2012 and
INR14.7bn in Sept 30, 2012).
• Shown commendable reduction in standalone receivable days to 208 days (from
242 days in March 31, 2012 and 222 days in Sept 30, 2012)
• Will save interest to the tune of INR0.8-1bn in FY14 due to recent fund raising.
• Upped tax guidance from 15-16% to 20% for FY13 and maintain 20% for FY14.
Outlook and valuations: Positive; maintain ‘BUY’
Factoring in lower MIS growth, higher interest and tax, we lower our FY13/14E PAT
estimate by ~26%/11%. We believe that MIS business is likely to stabilize in coming
quarters post witnessing a consolidation phase, owing to a change in business model.
We believe that most negatives have been factored in CMP. We maintain ‘BUY’ with a
revised target of INR91 based on DCF (INR95 earlier).

Ambuja Cements, Q3FY13 Result Update :: Centrum


Lower sales volume impacts margin
Ambuja Cements’ Q4CY12 result was below estimates primarily due to lower sales
volume of 5.14mt (vs. est. 5.4mt) and higher depreciation cost (14.8% QoQ increase
after adjustment for Rs279.1mn related to earlier years). The company reported
revenue of Rs23.1bn (vs. est. Rs24.2bn), adj. EBITDA of Rs4.5bn (vs. est. Rs4.8bn) and
EBITDA margin of 19.3% (vs. est. 19.8%). Lower-than-expected op. profit and higher
depreciation resulted in adj. profit of Rs2.4bn (vs. est. 2.8bn). We expect cement
demand growth to improve going forward post dismal demand in Q2 and Q3 and
expect demand growth of ~8% in FY14E and FY15E driven by demand from housing,
infrastructure and real estate sectors. Going forward, we expect utilization rate of
the industry to improve to ~81% by FY15E against ~76.5% in FY13E, which is
expected to result in volume growth for manufacturers. We believe that
improvement in utilization rate will help sustain higher prices. We revise our
earnings estimates downwards by 12%/5.6% to Rs11.8/Rs14.6 for CY13E and CY14E
respectively. We roll forward our valuation multiple to CY14E and arrive at a price
target of Rs231 (earlier: Rs247) for Dec ’13. We maintain Buy rating on the stock.
Lower sales volume results and depreciation in lower profit: Lower cement
sales volume of 5.14mt (2.8% YoY decline) offset increase of 2.2% YoY increase in
realization and led to revenue decline of 0.7% YoY to Rs23.3bn. Led by lower sales
volume and higher op. costs, adj. EBITDA (adj. for Rs180.7mn towards claims in
respect to subsidies from the government for the period Jan 1, 2012 to June 30,
2012) declined 1.8% YoY to Rs4.5bn. EBITDA margin was down 21bps YoY to
19.3%. Depreciation during the quarter (adjusted for Rs279.1mn in respect of
earlier years) increased 27.3% YoY (and 14.8% QoQ) to Rs1.6bn. Decline in op.
profit and higher depreciation resulted in 17.9% YoY decline in adj. profit to
Rs2.4bn.

Reliance Top 200: Invest :: Business Line


Anant Raj Industries Sales strong, rentals decline:: Prabhudas Lilladher


! Broadly in‐line: Anantraj reported revenues of Rs1.7bn, growth of 88% YoY &
34% QoQ, slightly ahead of our estimates on account of a land sale worth
Rs126m. Besides, the quarter also witnessed the ‘Sector 63’, Gurgaon project
crossing the revenue threshold this quarter.
EBITDA margins stood at 42% as against 53% in Q3FY12 as well as a similar
number in Q2FY13. The lower margins would also be on lower margin land sales
during the quarter. PAT stood at Rs531m, growth of 68% YoY & 7% QoQ, in-line
with our estimates.
! Sales & Revenue Break‐up: Sales during the quarter was largely contributed by
Sector 63, Gurgaon (~80%) and the remaining by ‘Neemrana’ and ‘Maceo’
(Sector 91, Gurgaon) projects. With regards to revenue recognition, 16.8% was
contributed by Maceo, 20.7% by Manesar, 12% by Neemrana, 35.5% by Sector
63, Gurgaon and 15% together by rentals and land sales.
! Rentals witnessed a sequential decline: Rentals declined from Rs153m in
Q2FY13 to Rs130m due to the expiry of the management contract on one of its
hotels. The shift from one operator to another led to a lag of three months.
Besides, some leases also expired at Manesar IT Park which has not yet been
renewed.
! Valuations: The company’s net assets are valued at Rs44.3bn, of which, we
deduct debt of Rs12.8bn which gives us a value of Rs31.5bn, translating to
Rs107/share. To arrive at our target price, we have valued the company at 15%
discount to NAV which gives a value of Rs91. We maintain ‘Accumulate’.

Pfizer, Q3FY13 Result Update :: Centrum


Disappointing results
Pfizer reported disappointing results for Q3FY13, showing a decline of 5%YoY in revenues, 370bps in EBIDTA margin and 11%YoY in net profit before EO items. The sales growth of the pharma segment was 1% due to slower growth of four key brands, Corex, Becosules, Gelusil and Dolonex. The introduction of new products in the domestic market is likely to drive growth. We have a Buy rating for the scrip with a revised target price at Rs1,290 (based on 17x FY14E EPS of Rs75.9) with an upside of 16.9%.

Slow domestic growth: Pfizer reported 5%YoY decline in total revenues from Rs2.70bn to Rs2.57bn due to slower growth of the pharma business and divestment of AHC business. The pharma business (86% of revenues) grew by 1%YoY from Rs2.18bn to Rs2.20bn. AHC revenues were ‘nil’ against Rs340mn. The services business grew by 100%YoY from Rs183mn to Rs366mn.

Margin under pressure: Pfizer’s EBIDTA margin declined by 370bps YoY from 19.3% to 15.6% mainly due to the increase in personnel cost. Material cost declined by 30bps from 30.5% to 30.2% of revenues due to the change in product mix with the absence of AHC products. Personnel cost grew by 340bps YoY from 17.8% to 21.2% due to increase in field force and revision in salaries. Other expenses grew by 40bps from 32.5% to 32.9% due to higher marketing expenses.

Crompton Greaves-Motilal Oswal research report


 Crompton Greaves' (CRG) 3QFY13 operating performance was below
expectations, largely impacted by losses in overseas business, constrained
business environment in domestic power segment and restructuring costs.
 Consolidated revenue at INR29.7b, declined 1.9% YoY, in line with our estimate.
Reported EBITDA margin was 0.1%. Consolidated net loss was INR1.9b (PAT of
INR1b in standalone business and losses of INR2.9b in subsidiaries).
 3QFY13 results include non-recurring restructuring costs of INR2.04b (INR1.2b
of employee retrenchment costs and INR830m of other incidental costs) in
Belgium. Adjusted for these, consolidated EBITDA margin was 2.9% below
our estimate of 4.7%. Adjusted net profit was INR149m (Standalone: net
profit of INR1b; Overseas: net loss of INR924m) v/s our estimate of INR370m.
 Consolidated order intake declined 34% YoY (Standalone: down 19% YoY;
Overseas: down 45% YoY) from a very high base last year. Order intake in
overseas business was also lower on account of CRG's deliberate strategy to
focus on execution (consolidated order book up 35% YoY) at this phase of the
ongoing restructuring program, as factories are already running at full
capacity. Order intake in the domestic power segment was robust at INR7.5b,
in line with the quarterly run rate and largely driven by pick-up in SEB orders.
 Restructuring in Belgium has been concluded and all restructuring costs have
been fully provided for. In Hungary, FY13 production is expected at 9,000MVA
(v/s the usual 3,000-3,500MVA per year). The immediate focus areas are
delivery pick-up by customers (EUR17m revenue target in 4QFY13).
 We have cut our FY13/14 EPS estimates by 3/4%, led by lower margin
expectations in the domestic power business. Maintain Buy, with a target of
INR150 (up from INR131 with rollover to FY15E).

ONGC - Q3FY13 Result Update :: LKP Research


ONGC - Q3FY13 Result Update

Q3FY13 results ahead of estimates
ONGC’s Q3FY13 net profit of Rs55.6bn was ahead of our estimate. Net revenues for the quarter stood at Rs210bn (yoy +15.8% qoq +6.1%). ONGC’s subsidy burden for the quarter was Rs124.3bn resulting in fall in its net realization to $47.97/bbl (yoy +6.7% qoq +2.5%). Crude oil sales volume grew sequentially by 4.3% while on an annual basis the growth was muted at 0.4%. Gas sales witnessed annual growth of 2.3% as against a decline of 0.5% on a sequential basis. Operating profit for the quarter of Rs112.4bn was significantly higher than our estimate of Rs100.8bn while operating profit margin was 53.5%. DDA cost increased sequentially by 18.3% to Rs44.1bn (yoy -2.7%) on account of higher depletion charge during the quarter. Other income declined by 30.6% qoq (+2.6% yoy) due to higher dividend income and forex gain of Rs2.5bn during the quarter in the preceding quarter.
The government announced a slew of measures to contain under recoveries – no subsidy on bulk diesel sales, monthly increase in diesel price by Rs0.4-0.5/litre, restricting LPG cylinders to 9 per family. However, we remain apprehensive about the actual implementation given that general elections are due in 2014. To our mind, the government would find it difficult to periodically increase diesel prices. We note that the net realizations of the upstream oil PSUs would still be affected by subsidy sharing mechanism which continues to remain ad hoc. Further, given the weak situation of its finances, the government could keep bulk of benefit due to lower under recoveries, for itself. We maintain our price target of Rs335 however revise our rating from BUY to NEUTRAL. At the CMP, the stock is trading at 9.7x and 4.0x FY14e EPS and EBITDA respectively.

Actual v/s Estimates
Y/E, Mar (Rs. m)
Q3FY13
Q2FY13
qoq (%)
Q3FY12
yoy (%)
LKP Estimates
Deviation (%/bps)
Revenue
209,872
197,882
6.1%
181,238
15.8%
197,570
6.2%
EBITDA
112,358
102,718
9.4%
106,576
5.4%
100,830
11.4%
EBITDA (%)
53.5%
51.9%
163 bps
58.8%
-527 bps
51.0%
250 bps
PAT
55,627
58,966
-5.7%
35,993
54.5%
52,821
5.3%


LKP Research

Sundaram Finance Target price (INR) 452 Momentum in loans sustains, upgrade to Hold ::Avendus


The higher‐than‐expected growth in the NII was driven by an
improvement in NIMs along with continued momentum in aggregate
loans. Calculated NIMs improved c30‐bp q‐o‐q to 7.4%, likely to have
been led by a rising proportion of used vehicles in the overall loan mix.
The proportion of used vehicles may not rise beyond current levels in
the near term, as per the management; consequently, the rise in NIMs
may not sustain. We forecast stable NIMs at a three‐year mean of 6.9%
over FY13f–FY15f. The marginal uptick in GNPLs from 0.78% at Sep12‐
end to 0.88% at Dec12‐end is unlikely to be alarming. We raise our
earnings by 2%–5% over FY13f–FY15f, driven largely by higher
disbursements and consequently loans. We raise our Dec13 TP to
INR452 and upgrade to Hold. Slowdown in loans & high NPLs are key
risk factors.
Strong NII growth driven by sequential improvement in spreads
A c20‐bp improvement in spreads was aided by a 50‐bp sequential expansion in
the yields. Combined with a 5% q‐o‐q loan growth drove a 24% y‐o‐y NII
expansion, higher than expectations. Used vehicles now constitute c13%, while
cars and new CVs continue to be the dominant segments at 34% and 53% of
overall loans, respectively. We raise our disbursement forecast from a CAGR of
14% to 16%, while aggregate loans are forecast to increase at a CAGR of 18%
over FY13f–FY15f.
Improvement in NIMs may not sustain
NIMs improved c30‐bp q‐o‐q to c7.4%, likely to have been driven by a rising
proportion of used vehicles in the overall loan mix. The proportion of used
vehicles may not rise beyond the current levels as per the management;
consequently, the rise in NIMs may not sustain. We forecast stable NIMs at a
three‐year mean of 6.9% over FY13f–FY15f.
Marginal uptick in NPLs, though not alarming
GNPLs, as a proportion of aggregate loans, increased from 0.78% at Sep12‐end
to 0.88% as at Dec12‐end. We project incremental gross NPLs at 0.6% of loans
and loan‐loss provisions to average loans at a mean of 0.3% over FY13f–FY15f.
Raise earnings by 2%–5%, upgrade to Hold
We raise our FY13f–FY15f earnings by 2%–5%, led by higher disbursements and
loans. The stock has underperformed the Bankex by 6% and the NBFC Index by
10% over the past three months. Valuations at 2.6x one‐year fwd P/B still
appear rich. The Dec13 TP is raised to INR452 and we upgrade to Hold.

Tax Talk- Feb 13 :: Business Line


Vide the referred section (80TTA of the I-T Act), interest income in savings bank account up to Rs 10,000 has been made exempt from income tax.
I request you to let me know what shall be the tax treatment if the interest income goes beyond Rs 10,000 i.e. whether the entire amount or amount in excess of Rs 10,000 shall be taxable.
— Suresh
The Finance Act 2012, introduced a new section 80TTA in the Income-tax Act, 1961. According to this section, the aggregate amount of interest earned on the savings bank account or Rs 10,000, whichever is lower, shall be allowed as a deduction against the total income of an individual or HUF in respect of the interest earned on saving bank account with a bank, post office or cooperative society as specified.
This section provides for a deduction and not an exemption i.e. first of all the total interest income earned will have to be included in the total income of the individual or HUF, and then deduction of a maximum of Rs 10,000 or actual interest earned whichever is lower, will have to be claimed as a deduction against the total income.
Please note that the deduction is not applicable to interest earned on time deposits (i.e. deposits repayable on expiry of fixed periods). The deduction under his section is applicable for AY 2013-14 onwards (i.e. FY 2012-13).
I am a senior citizen having interest income of about Rs 3-3.5 lakh. I have recently sold jewellery worth Rs 10 lakh (@ Rs 3,000 per gram). This was purchased 50 years ago. As I understand, sale proceeds of jewellery attract tax. Whether it will be capital gains tax or according to applicable tax slab.
I also understand that sale proceeds of jewellery will be taxed as index cost. If yes, what will be index as on November/December 2012 and January 2013?
— Ashaben
According to the Income-tax law, Long Term Capital Gains (LTCG) shall be computed by deducting from the gross sale consideration received or accruing on sale of the long term asset, the following amounts, namely:
-The indexed cost of acquisition of the asset and the indexed cost of improvement;
-Expenditure incurred wholly and exclusively in connection with such transfer;
Since the jewellery was purchased 50 years ago, it is a long term capital asset. The cost of acquisition to be considered for the purpose of calculating capital gains can be the fair market value of the asset as on April 1, 1981, or the actual cost of purchase, according to the assesse’s choice. Further, the cost of any improvement incurred prior to April 1, 1981 has to be ignored. The LTCG so calculated, will be subject to tax at rate of 20.6 per cent (inclusive of Education Cess and Secondary and Higher Secondary Education Cess).
According to the notification issued by the income tax authorities, the Cost Inflation Index for the Financial Year 2012-13 is “852” and for Financial Year 1981-82 is “100”.