Buy Hindustan Construction Company –Target Price Rs.49
Hindustan Construction Company (HCC) is recommended to buy with a target price of Rs.49 over one year. The stock is currently traded in the range of Rs.31.
The company has reported revenue of Rs.1060 crore for 1QFY12. Revenue is higher by 6.3% yoy but lower than street estimates. For the company, the first two quarters of the financial year are seasonally weak.
Order book stands at Rs.17000 crore, excluding Rs.1940 crore Sawalkote project and the order book is 3.7 multiple of FY12 expected revenue. Water and hydro projects dominate order book constituting 60% of oreder backlog.
EBITDA at Rs.140 crore increased 9.7% yoy and better than market estimates. EBITDA margin has increased by 40 bps yoy to 13%.
Interest expenses at Rs.93.25 crore increased 61% yoy due to higher interest from FCCB refinancing and 200 bps increase in interest rate on average.
Tax rate for the quarter was 53% versus 22% in 1QFY11 due to disallowance of certain interest expenditure related to its subsidiaries.
PAT declined by 83% yoy to Rs.4.87 crore.
Debt increased 7% qoq and 23% yoy to Rs.3710 crore.
HCC has divested 14.5% stake in its BOT holding company for Rs.240 crore. The BOT holding company has been valued at Rs.1650 crore and HCC had 85.5% stake in it. The company had invested Rs.653 crore in the equity of the BOT company. More funds will be infused in the BOT holding company in the coming 12 -18 months.
Based on the quarterly performance, it seems that the core business of the company continues to suffer and Lavasa is the lone driver for the stock.
The scrip is recommended to buy with a one year target price of Rs.49. Target price would be revised in due course.
Friday, July 29, 2011
Thursday, July 28, 2011
Good Value Buy Tips : HCL Tech – Target Price Rs.600
Company has reported strong performance for 4QFY11 (Year end in June) with revenue, EBITDA and net profit exceeding market expectations by around 3%.
EBIT margin expanded by 110 bps against the guidance of 100 bps expansion. Thus the management has kept up its promise.
USD revenue growth at 5.3% qoq is above street estimate and also at the higher end of the peer group( USD revenue growth of the peer group ranges from 1 -7%.
The company has signed 20 new transformational deals in 4Q and this suggests continued revenue visibility.
The market expects EBIT margin expansion of 50-100 bps for FY12 though the management has not committed on it. This seems achievable as the business prospects are improving and current margin is substantially lower than that of FY10.
USD revenue growth of 5.3% was mainly from 10.5% growth in infrastructure services, which constitutes 25% of revenue. This has offset the lower than expected growth of 4.3% from software and - 4.2% revenue growth from BPO.
Among the verticals, the standout areas are energy, utilities, public sector, publishing and entertainment.
The company is undergoing a positive long term transformation and this has increased attraction on the stock. After the revamp of BPO business in FY12, the company will have the most balanced portfolio among peers with a healthy mix of enterprise solutions, applications, infrastructure services and engineering services.
The only concern is regarding current depressed margins and this need to be addressed.
MARKET OUTLOOK
Stock market slip very sharply because of that some good fundamental stock at good low value. it is good opportunities for value buy pics.
Several fundamentally strong midcap stocks are trading at attractive valuations. Among midcaps, our preferred stocks are IRB Infrastructure, Indian Hotels, Sintex Industries, Shree Renuka Sugars, Sobha Developers, KEC International, Persistent Systems etc
EBIT margin expanded by 110 bps against the guidance of 100 bps expansion. Thus the management has kept up its promise.
USD revenue growth at 5.3% qoq is above street estimate and also at the higher end of the peer group( USD revenue growth of the peer group ranges from 1 -7%.
The company has signed 20 new transformational deals in 4Q and this suggests continued revenue visibility.
The market expects EBIT margin expansion of 50-100 bps for FY12 though the management has not committed on it. This seems achievable as the business prospects are improving and current margin is substantially lower than that of FY10.
USD revenue growth of 5.3% was mainly from 10.5% growth in infrastructure services, which constitutes 25% of revenue. This has offset the lower than expected growth of 4.3% from software and - 4.2% revenue growth from BPO.
Among the verticals, the standout areas are energy, utilities, public sector, publishing and entertainment.
The company is undergoing a positive long term transformation and this has increased attraction on the stock. After the revamp of BPO business in FY12, the company will have the most balanced portfolio among peers with a healthy mix of enterprise solutions, applications, infrastructure services and engineering services.
The only concern is regarding current depressed margins and this need to be addressed.
MARKET OUTLOOK
Stock market slip very sharply because of that some good fundamental stock at good low value. it is good opportunities for value buy pics.
Several fundamentally strong midcap stocks are trading at attractive valuations. Among midcaps, our preferred stocks are IRB Infrastructure, Indian Hotels, Sintex Industries, Shree Renuka Sugars, Sobha Developers, KEC International, Persistent Systems etc
Wednesday, July 27, 2011
Stock Buy : Balrampur Chini Mills
Buy Balrampur Chini Mills : Target Price lowered to Rs.85
# Buy call on Balrampur Chini Mills is retained with a reduced target price of Rs.85, for
1QFY12.
# Company missed EBITDA and net income estimates of the market for 1QFY12 because of lower than expected distillery income as well as lower sugar realization.
# EBITDA margin declined to 7.7% in 1QFY12 as against 11.6% for 1QFY11.
# Distillery realization declined to Rs.23.8/ kg, 9% lower qoq due to onetime disruption in supplies. Now, it has recovered to Rs.26/kg.
# Sugar realization was lower at Rs.27.2/kg as against the market expectation of Rs.27.7/kg.
# On the positive side, profit from co-generation segment increased 36% yoy due to increase in volume. Realisation from this segment has increased 3% yoy.
# On a medium term perspective, the outlook on the stock will be impacted by regulatory decisions such as regulated sugar cane prices, deregulation of the sector etc. For the near term, sugar cane prices may continue to remain high in view of upcoming Uttar Pradesh election. On the other side, any news on deregulation of the sector would be a positive catalyst on the stock and the management expects that some of the regulations like levy quota and release mechanism would be done away with.
# Company expects sugar cane price de-regulation by the next crushing season.
# Production for FY12 is expected at 26 million tons versus 24.3 million tons in FY11. Sugar production in FY11 increased 30% yoy and it is likely to increase 10 -12% in FY12. Company expects that FY12 would be another volume driven year.
# As on June 30, 2011, long term loans are at Rs. 720 crore and working capital loans are at Rs.680 crore.
# Balrampur Chini is preferred due to its strong balance sheet, low capex and high contribution from power division.
# Considering the earnings miss in 1QFY12, the target price is lowered to Rs.85 from Rs.100 earlier. The target price is at 1.5 multiple of its long term average price/ book value ratio.
# Buy call on Balrampur Chini Mills is retained with a reduced target price of Rs.85, for
1QFY12.
# Company missed EBITDA and net income estimates of the market for 1QFY12 because of lower than expected distillery income as well as lower sugar realization.
# EBITDA margin declined to 7.7% in 1QFY12 as against 11.6% for 1QFY11.
# Distillery realization declined to Rs.23.8/ kg, 9% lower qoq due to onetime disruption in supplies. Now, it has recovered to Rs.26/kg.
# Sugar realization was lower at Rs.27.2/kg as against the market expectation of Rs.27.7/kg.
# On the positive side, profit from co-generation segment increased 36% yoy due to increase in volume. Realisation from this segment has increased 3% yoy.
# On a medium term perspective, the outlook on the stock will be impacted by regulatory decisions such as regulated sugar cane prices, deregulation of the sector etc. For the near term, sugar cane prices may continue to remain high in view of upcoming Uttar Pradesh election. On the other side, any news on deregulation of the sector would be a positive catalyst on the stock and the management expects that some of the regulations like levy quota and release mechanism would be done away with.
# Company expects sugar cane price de-regulation by the next crushing season.
# Production for FY12 is expected at 26 million tons versus 24.3 million tons in FY11. Sugar production in FY11 increased 30% yoy and it is likely to increase 10 -12% in FY12. Company expects that FY12 would be another volume driven year.
# As on June 30, 2011, long term loans are at Rs. 720 crore and working capital loans are at Rs.680 crore.
# Balrampur Chini is preferred due to its strong balance sheet, low capex and high contribution from power division.
# Considering the earnings miss in 1QFY12, the target price is lowered to Rs.85 from Rs.100 earlier. The target price is at 1.5 multiple of its long term average price/ book value ratio.
Tuesday, July 26, 2011
MARKETS CRASH AFTER RBI CREDIT POLICY
After declare RBI credit policy market crash very sharply and not get back at the end of day sensex shut door at 18518 down 353 point and Nifty close at 5575 down 105 point.
• Markets today opened on a quiet note & traded flattish in the early morning session awaiting the RBI credit policy, which announced a rise of 50bps in the repo & reverse repo rates while keeping the CRR unchanged at 6%. The unexpected rise in the interest rates led to a steep fall in the markets and the stocks of interest rates sensitive sectors like realty, banking and auto declined significantly. Earlier, US markets ended in negative while Asian indices closed in green. European markets displayed mixed and volatile trade.
• Asian Indices: China +0.53%, Hong Kong +1.25%, Japan +0.47%, S Korea +0.85%, Taiwan +1.28%.
• European Indices*: France ‐0.45%, Germany +0.15%, UK +0.09%.
• Bse Sectoral Indices: Losers: Realty ‐3.55%, CG ‐3.49%, Bankex ‐2.46%, Auto ‐2.14%, Power ‐1.88%, FMCG ‐1.56%, PSU ‐1.42%, Oil & Gas ‐1.28%, Metal ‐1.27%, CD ‐1.10% Laggards: IT ‐0.10%
• Markets today opened on a quiet note & traded flattish in the early morning session awaiting the RBI credit policy, which announced a rise of 50bps in the repo & reverse repo rates while keeping the CRR unchanged at 6%. The unexpected rise in the interest rates led to a steep fall in the markets and the stocks of interest rates sensitive sectors like realty, banking and auto declined significantly. Earlier, US markets ended in negative while Asian indices closed in green. European markets displayed mixed and volatile trade.
• Asian Indices: China +0.53%, Hong Kong +1.25%, Japan +0.47%, S Korea +0.85%, Taiwan +1.28%.
• European Indices*: France ‐0.45%, Germany +0.15%, UK +0.09%.
• Bse Sectoral Indices: Losers: Realty ‐3.55%, CG ‐3.49%, Bankex ‐2.46%, Auto ‐2.14%, Power ‐1.88%, FMCG ‐1.56%, PSU ‐1.42%, Oil & Gas ‐1.28%, Metal ‐1.27%, CD ‐1.10% Laggards: IT ‐0.10%
Review of RBI Monetary Policy Q1FY12
Key Policy Action & its Backdrop
RBI has increased the repo rate under the liquidity adjustment facility (LAF) by 50 basis points from 7.50% to 8% with immediate effect.
The reverse repo rate under the LAF, determined with a spread of 100 bps below the repo rate gets automatically adjusted to 7% with immediate effect.
The Marginal Standing Facility (MSF) determined with a spread of 100 bps above the repo rate, automatically adjusts to 9%.
RBI has maintained the baseline projection of real GDP growth at 8% for FY12 on the assumption that the buoyancy in consumption and exports performance, if continued, will contain growth moderation. However, considering the domestic demand-supply balance and global trends in commodity prices, RBI has revised its expectation for WPI inflation for March 2012 to 7% (from 6% indicated in May 3 policy).
The current trends in money supply (M3) and credit growth has remained above the indicative trajectory of the RBI. Keeping in view the evolving growth-inflation dynamics, RBI has revised the indicative projection of M3 growth for 2011-12 downwards from 16.0% to 15.5% and Non-food bank credit growth projection from 19.0% to 18.0%.
The rate hike come in a back drop of:
# Actual inflation being higher than expected,
# Recent increase in domestic administered fuel prices and the minimum support prices for certain food items will keep inflation under pressure,
# Sharp revision in non-food manufactured products inflation during Feb-April 2011 confirms strong demand pressures, and
# Crude oil prices remain volatile
RBI has increased the repo rate under the liquidity adjustment facility (LAF) by 50 basis points from 7.50% to 8% with immediate effect.
The reverse repo rate under the LAF, determined with a spread of 100 bps below the repo rate gets automatically adjusted to 7% with immediate effect.
The Marginal Standing Facility (MSF) determined with a spread of 100 bps above the repo rate, automatically adjusts to 9%.
RBI has maintained the baseline projection of real GDP growth at 8% for FY12 on the assumption that the buoyancy in consumption and exports performance, if continued, will contain growth moderation. However, considering the domestic demand-supply balance and global trends in commodity prices, RBI has revised its expectation for WPI inflation for March 2012 to 7% (from 6% indicated in May 3 policy).
The current trends in money supply (M3) and credit growth has remained above the indicative trajectory of the RBI. Keeping in view the evolving growth-inflation dynamics, RBI has revised the indicative projection of M3 growth for 2011-12 downwards from 16.0% to 15.5% and Non-food bank credit growth projection from 19.0% to 18.0%.
The rate hike come in a back drop of:
# Actual inflation being higher than expected,
# Recent increase in domestic administered fuel prices and the minimum support prices for certain food items will keep inflation under pressure,
# Sharp revision in non-food manufactured products inflation during Feb-April 2011 confirms strong demand pressures, and
# Crude oil prices remain volatile
Monday, July 25, 2011
Good Stock Tips Advice : Hold Hindustan Zinc – Target Price Rs.147
1QFY12 result is in line with market expectations. Revenue and EBITDA are slightly lower than market expectations. However, PAT higher than street estimates by 5% because of higher than expected other income.
Production declined from the expected level because of unplanned two weeks shutdown at the flagship Rampura Agucha mine.
Operating cost /ton declined slightly because of a qoq decline in royalty.
However, cost pressure is expected to continue in FY12&13 because of increased share of production from lower grade underground mines, start of initial work on underground mining at Agucha and continued strength of coal prices.
The outlook for Zinc may continue to remain weaker than that of lead as Zinc is expected to stay surplus in 2011&2012.
It seems that current zinc prices are substantially above the marginal cost and the price may move lower as the risk appetite wanes.
On the other hand, demand –supply for lead would be in balance in 2012 and may be a deficit of 2lakh tons by 2013.
EPS estimates for FY12 has been cut by 5.4% and it has been increased by 3.7% for FY13, factoring slower ramp up in Dariba and revised metal price assumptions.
The stock is currently traded at 9.5 multiple of FY12 expected earnings and at 7.6 multiple of FY13 expected EPS. Thus, it seems that the stock is expensive while compared to global peers and does not look a compelling buy.
Production declined from the expected level because of unplanned two weeks shutdown at the flagship Rampura Agucha mine.
Operating cost /ton declined slightly because of a qoq decline in royalty.
However, cost pressure is expected to continue in FY12&13 because of increased share of production from lower grade underground mines, start of initial work on underground mining at Agucha and continued strength of coal prices.
The outlook for Zinc may continue to remain weaker than that of lead as Zinc is expected to stay surplus in 2011&2012.
It seems that current zinc prices are substantially above the marginal cost and the price may move lower as the risk appetite wanes.
On the other hand, demand –supply for lead would be in balance in 2012 and may be a deficit of 2lakh tons by 2013.
EPS estimates for FY12 has been cut by 5.4% and it has been increased by 3.7% for FY13, factoring slower ramp up in Dariba and revised metal price assumptions.
The stock is currently traded at 9.5 multiple of FY12 expected earnings and at 7.6 multiple of FY13 expected EPS. Thus, it seems that the stock is expensive while compared to global peers and does not look a compelling buy.
Sunday, July 24, 2011
Value tips for Stock Market : Dish TV as the valuation is expensive
Dish TV as the valuation is expensive – Target Price Rs.75
current market price of Rs.85 range, Dish TV appears expensive and the price would decline to Rs.75 in one year. Hence, it looks better to pare exposure in the stock.
The company has reported strong result for 1QFY12. Revenue grew 51% yoy with profit
margins improving to 24.4%. Net loss has been reduced to Rs.18.3 crore.
The company has added 7.2 lakh subscribers during the quarter and the subscriber acquisition cost has been reduced by 7.5%.
However, programming cost has increased above the expected level due to renewal of two content agreements.
Sales commissions were lower due to reduction in commission rates and lower new connection sales.
increase in inactive subscribers is a major concern and this has led to a decline in net addition to 4 lakh subscribers, the lowest in the last five quarters. Inactive subscribers issue may continue for another two quarters.
Strong performance of the company business, target price of the stock has been reduce only Rs.75 from the earlier estimate of Rs.40. However, the current price is higher than the target price and the stock is looking expensive at the current rate.
current market price of Rs.85 range, Dish TV appears expensive and the price would decline to Rs.75 in one year. Hence, it looks better to pare exposure in the stock.
The company has reported strong result for 1QFY12. Revenue grew 51% yoy with profit
margins improving to 24.4%. Net loss has been reduced to Rs.18.3 crore.
The company has added 7.2 lakh subscribers during the quarter and the subscriber acquisition cost has been reduced by 7.5%.
However, programming cost has increased above the expected level due to renewal of two content agreements.
Sales commissions were lower due to reduction in commission rates and lower new connection sales.
increase in inactive subscribers is a major concern and this has led to a decline in net addition to 4 lakh subscribers, the lowest in the last five quarters. Inactive subscribers issue may continue for another two quarters.
Strong performance of the company business, target price of the stock has been reduce only Rs.75 from the earlier estimate of Rs.40. However, the current price is higher than the target price and the stock is looking expensive at the current rate.
Saturday, July 23, 2011
Upgraded Petronet LNG to ‘hold on’ – Target Price hiked to Rs.171
Petronet LNG has been upgraded to ‘hold’ from the earlier ‘reduce’ recommendation and the target price has also been hiked to Rs.171 over one year. In the earlier ‘reduce’ recommendation, the price was expected to drop to Rs.115 level.
The upgrade is after the robust performance of the company in the last two quarters, beating consensus profit estimates of the market with better than expected profit margin at 20%.
Responding to positive surprises, the stock has outperformed the market by about 20% in the last six months.
Earlier, it was assumed that the utilization level of Dahej plant would peak at 100% and the average blended reras margin was expected at USD 0.73 / mmbtu (Million Metric British Thermal Unit).
As against this, the company achieved utilization level of 120% in June 2011 with a marketing margin of USD1/ mmbtu. Earnings have been revised accordingly.
Demand for spot LNG is expected to remain strong owing to better economics compared to liquid fuel. Further, expected shortfall in RIL’s KG –D6 volumes in FY12/13 may lower the availability of cheaper domestic gas and this would be advantageous to Petronet LNG.
During 1QFY12, the company has reported its highest ever PAT of Rs.257 crore, which is 130% higher yoy and 24.4% up qoq. The jump in profit is due to superior marketing margin of around USD1/ mmbtu and better margin from regas services.
EPS for FY12 has been upgraded by 40%, assuming higher utilization level of 104% for the year, as against 100% in the year before and better marketing margin of USD1/mmbtu.
Revised target price of Rs.171 is at a P/E multiple of 14 of FY13 expected earnings. This factors a strong earnings growth of 20% over FY11-14.
The company is likely to enter in to a contract with Qatar for 2-4 mtpa of gas for its Dahej/ Kochi terminals. The entry in to such a contract would be a short term trigger on the stock price.
The upgrade is after the robust performance of the company in the last two quarters, beating consensus profit estimates of the market with better than expected profit margin at 20%.
Responding to positive surprises, the stock has outperformed the market by about 20% in the last six months.
Earlier, it was assumed that the utilization level of Dahej plant would peak at 100% and the average blended reras margin was expected at USD 0.73 / mmbtu (Million Metric British Thermal Unit).
As against this, the company achieved utilization level of 120% in June 2011 with a marketing margin of USD1/ mmbtu. Earnings have been revised accordingly.
Demand for spot LNG is expected to remain strong owing to better economics compared to liquid fuel. Further, expected shortfall in RIL’s KG –D6 volumes in FY12/13 may lower the availability of cheaper domestic gas and this would be advantageous to Petronet LNG.
During 1QFY12, the company has reported its highest ever PAT of Rs.257 crore, which is 130% higher yoy and 24.4% up qoq. The jump in profit is due to superior marketing margin of around USD1/ mmbtu and better margin from regas services.
EPS for FY12 has been upgraded by 40%, assuming higher utilization level of 104% for the year, as against 100% in the year before and better marketing margin of USD1/mmbtu.
Revised target price of Rs.171 is at a P/E multiple of 14 of FY13 expected earnings. This factors a strong earnings growth of 20% over FY11-14.
The company is likely to enter in to a contract with Qatar for 2-4 mtpa of gas for its Dahej/ Kochi terminals. The entry in to such a contract would be a short term trigger on the stock price.
IRB Infra – Result beats estimates; reiterate ‘buy’ with TP Rs.250
IRB Infra has reported better than expected numbers for 1QFY12. Buy rating is maintained with a target price of Rs.250 over one year. The stock is our top pick in this space.
Company has reported 1Q revenue of Rs.800 crore, an increase of 50% yoy and above the street estimates.
EBITDA increased 22% yoy to Rs.330 crore and well above market estimates.
Net profit increased 14% yoy to Rs.130 crore, beating market expectations.
Strong performance was led by the construction division. Construction revenue increased 81% to Rs. 600 crore with better margin.
EBITDA margin of the construction division at 25.9% is 590 bps higher than market estimates. Better margin from Surat – Dahisar project has helped the company to report better than expected margin from the construction division.
Toll revenue increased 14% yoy to Rs.230 crore, mainly due to 18% toll hike in Mumbai – Pune project. Surat – Dahisar project reported 6.8% increase in toll revenue to Rs.94.2 crore, Bharuch – Surat project reported 12.8% yoy increase in toll revenue to Rs.33.6 crore. Tumkur – Chitradurga project operational since June also contributed Rs.11.4 crore to toll revenue.
However, interest expenses were 33% higher than market estimates and this has led to 33% miss in tolling PAT.
As mentioned in the earlier report, four major projects worth of Rs.9300 crore are coming up for bidding in the near term. It includes Rs.5400 crore Kishangarh – Ahmedabad project and Rs.1900 crore Jabalpur –Rewa project. Any project win will be a major catalyst for the stock price.
IRB Infra is preferred in this space because of its execution capabilities and access to financing. Buy rating on the stock is reiterated with a target price of Rs.250 over one year.
Company has reported 1Q revenue of Rs.800 crore, an increase of 50% yoy and above the street estimates.
EBITDA increased 22% yoy to Rs.330 crore and well above market estimates.
Net profit increased 14% yoy to Rs.130 crore, beating market expectations.
Strong performance was led by the construction division. Construction revenue increased 81% to Rs. 600 crore with better margin.
EBITDA margin of the construction division at 25.9% is 590 bps higher than market estimates. Better margin from Surat – Dahisar project has helped the company to report better than expected margin from the construction division.
Toll revenue increased 14% yoy to Rs.230 crore, mainly due to 18% toll hike in Mumbai – Pune project. Surat – Dahisar project reported 6.8% increase in toll revenue to Rs.94.2 crore, Bharuch – Surat project reported 12.8% yoy increase in toll revenue to Rs.33.6 crore. Tumkur – Chitradurga project operational since June also contributed Rs.11.4 crore to toll revenue.
However, interest expenses were 33% higher than market estimates and this has led to 33% miss in tolling PAT.
As mentioned in the earlier report, four major projects worth of Rs.9300 crore are coming up for bidding in the near term. It includes Rs.5400 crore Kishangarh – Ahmedabad project and Rs.1900 crore Jabalpur –Rewa project. Any project win will be a major catalyst for the stock price.
IRB Infra is preferred in this space because of its execution capabilities and access to financing. Buy rating on the stock is reiterated with a target price of Rs.250 over one year.
Friday, July 22, 2011
OUT LOOK ABOUT COMMODITY MARKET
GOLD :
Medium term outlook for Gold prices remain neutral. It is likely to remain volatile in the range of Rs.22800 & Rs.23300.
SILVER :
Medium term outlook for Silver prices remain neutral. It is likely to remain volatile in the range of Rs.56600 & Rs.60700.
CRUDE OIL :
Yesterday WTI Crude prices moved past $100 for the first time since 16th June 2011. Sustaining above $99/Rs. is key to keep its immediate up-move intact.
Medium term outlook for Gold prices remain neutral. It is likely to remain volatile in the range of Rs.22800 & Rs.23300.
SILVER :
Medium term outlook for Silver prices remain neutral. It is likely to remain volatile in the range of Rs.56600 & Rs.60700.
CRUDE OIL :
Yesterday WTI Crude prices moved past $100 for the first time since 16th June 2011. Sustaining above $99/Rs. is key to keep its immediate up-move intact.
Thursday, July 21, 2011
VALUE PICKS BUY
NUCLEUS SOFTWARE EXPORTS LTD
52 Week H/L : 154.00 / 72.60
Face Value : 10
CMP : 79
Target : 106
Nucleus Software looks good for short term target of rs. 106 very good company in software development.
52 Week H/L : 154.00 / 72.60
Face Value : 10
CMP : 79
Target : 106
Nucleus Software looks good for short term target of rs. 106 very good company in software development.
Wednesday, July 20, 2011
CADILA HEALTHCARE LIMITED
Cadila Healthcare Limited. (Cadila) has reported dismayed set of numbers for the quarter ended June’11 after a strong performance in FY11. The company has recorded revenues of Rs. 12456.9 mn with a growth of 9.9%, with PAT growing to Rs. 2298.2 mn, a growth of 15.4%. The following are the key highlights of the results which are summarized below:
Key Highlights of Q4FY11
· Revenues grew by 9.9% YoY from Rs. 11337.8 mn in Q1FY11 to Rs. 12456.9 mn in Q1FY12. The company witnessed disappointing growth of 4.8% in its domestic formulation business as compared to a growth of 8.5% in its export formulation business.
· Domestic Business excluding Bayer JV registered a meager growth of 4.9% from Rs. 5675 mn in Q1FY11 to Rs. 5946 mn in Q1FY12. The domestic formulations segment was dissatisfying with a mere 4.8% growth on the back of transfer of a few products to the Bayer JV and higher sales in the previous quarter. Consumer business during the quarter exhibited a muted 7% growth, largely due to higher material cost, disruption of sales on account of plant closure for 2 weeks. Nutralite also saw a 15% price increase in the quarter, the immediate response to which was not pleasing. However, the company’s management is optimistic of achieving 15% growth in the domestic formulations business and a 15-20% growth in its consumer business.
· Export formulations business registered a growth of 8.5% to Rs. 4136 mn on the back of a strong growth witnessed in select geographies mainly Europe (22%), Brazil (21%), and Japan (26%). However, the company witnessed a sluggish growth of 7.5% in US formulations and 18% de-growth in the emerging market formulations. The management is optimistic of reverting back to historical strong growth rates in the US and emerging markets. On the export API front, the company saw a 25% decline in revenues mainly on account of decline in sales from the Zydus-Nycomed JV.
· Cadila registered a threefold growth in its JV business at Rs. 1127 mn with the major contributor being the Hospira JV. The quarter also saw the commencement of operations of the Bayer JV.
· Higher employee cost and other expenses caused operating margins to decline to 24.3% from 25.8% YoY resulting in mere 3.2% growth in operating profits to Rs. 3023.9 mn as against Rs. 2930.2 mn in Q1FY11.
· Net Profit grew by 15.4% YoY from Rs. 1991.8 mn to Rs. 2298.2 mn in Q1FY12 whereas margins were at 18.4% on the back of lower tax rate and interest cost during the quarter.
OUTLOOK & VALUATION
We view the muted growth in Q1FY12 as a pause from the aggressive sales activity taken up by the company for achieving the $ 1 bn target in FY11. With a vision of the management of tripling its business by FY15, we believe Cadila's future growth is still intact and will be led by increased traction in its international businesses, a ramp-up in supplies to Hospira and a sustained double-digit growth in the domestic formulations and consumer businesses. However, we believe the stock performance may remain muted in the near term on the back of lower sales growth momentum and the warning letter overhang on its Injectibles facility. We maintain our FY12E & FY13E estimates as we believe it is fairly achievable and recommend a HOLD on the stock with a target price of Rs. 960 (based on 20x its FY13E EPS of Rs. 47.9). It is currently trading at a P/E of 18.4x its FY13E EPS of Rs. 47.9.
Key Highlights of Q4FY11
· Revenues grew by 9.9% YoY from Rs. 11337.8 mn in Q1FY11 to Rs. 12456.9 mn in Q1FY12. The company witnessed disappointing growth of 4.8% in its domestic formulation business as compared to a growth of 8.5% in its export formulation business.
· Domestic Business excluding Bayer JV registered a meager growth of 4.9% from Rs. 5675 mn in Q1FY11 to Rs. 5946 mn in Q1FY12. The domestic formulations segment was dissatisfying with a mere 4.8% growth on the back of transfer of a few products to the Bayer JV and higher sales in the previous quarter. Consumer business during the quarter exhibited a muted 7% growth, largely due to higher material cost, disruption of sales on account of plant closure for 2 weeks. Nutralite also saw a 15% price increase in the quarter, the immediate response to which was not pleasing. However, the company’s management is optimistic of achieving 15% growth in the domestic formulations business and a 15-20% growth in its consumer business.
· Export formulations business registered a growth of 8.5% to Rs. 4136 mn on the back of a strong growth witnessed in select geographies mainly Europe (22%), Brazil (21%), and Japan (26%). However, the company witnessed a sluggish growth of 7.5% in US formulations and 18% de-growth in the emerging market formulations. The management is optimistic of reverting back to historical strong growth rates in the US and emerging markets. On the export API front, the company saw a 25% decline in revenues mainly on account of decline in sales from the Zydus-Nycomed JV.
· Cadila registered a threefold growth in its JV business at Rs. 1127 mn with the major contributor being the Hospira JV. The quarter also saw the commencement of operations of the Bayer JV.
· Higher employee cost and other expenses caused operating margins to decline to 24.3% from 25.8% YoY resulting in mere 3.2% growth in operating profits to Rs. 3023.9 mn as against Rs. 2930.2 mn in Q1FY11.
· Net Profit grew by 15.4% YoY from Rs. 1991.8 mn to Rs. 2298.2 mn in Q1FY12 whereas margins were at 18.4% on the back of lower tax rate and interest cost during the quarter.
OUTLOOK & VALUATION
We view the muted growth in Q1FY12 as a pause from the aggressive sales activity taken up by the company for achieving the $ 1 bn target in FY11. With a vision of the management of tripling its business by FY15, we believe Cadila's future growth is still intact and will be led by increased traction in its international businesses, a ramp-up in supplies to Hospira and a sustained double-digit growth in the domestic formulations and consumer businesses. However, we believe the stock performance may remain muted in the near term on the back of lower sales growth momentum and the warning letter overhang on its Injectibles facility. We maintain our FY12E & FY13E estimates as we believe it is fairly achievable and recommend a HOLD on the stock with a target price of Rs. 960 (based on 20x its FY13E EPS of Rs. 47.9). It is currently trading at a P/E of 18.4x its FY13E EPS of Rs. 47.9.
Monday, July 18, 2011
INDIAN EQUITY MARKET
• Indian share indices ended lower on Friday on weak global cues and FII selling on
fears of more interest rate hikes by RBI in its policy review to curb high inflation.
• IT stocks were the movers of Nifty with TCS (the top gainer), HCL and NIIT
ending up 1-5%.
• However, stocks of auto, real estate, and FMCG pulled the indices down with Tata
Motors, Bajaj Auto, Sterlite, Sesa Goa and HUL, ending 1-2% down.
• DB Realty ended 0.6% lower on news that the Pimpri Chinchwad New Town
Development Authority has annulled the bidding process for a township project,
which the company's joint venture was to develop.
• Among financial stocks, ICICI Bank, HDFC and Kotak Mahindra Bank declined 1-
2% while that of HDFC Bank ended up 0.6% ahead of its Apr-Jun earnings next
week.
• Among other stocks, SKS Microfinance and VST Industries surged 10% and 9%
respectively.
fears of more interest rate hikes by RBI in its policy review to curb high inflation.
• IT stocks were the movers of Nifty with TCS (the top gainer), HCL and NIIT
ending up 1-5%.
• However, stocks of auto, real estate, and FMCG pulled the indices down with Tata
Motors, Bajaj Auto, Sterlite, Sesa Goa and HUL, ending 1-2% down.
• DB Realty ended 0.6% lower on news that the Pimpri Chinchwad New Town
Development Authority has annulled the bidding process for a township project,
which the company's joint venture was to develop.
• Among financial stocks, ICICI Bank, HDFC and Kotak Mahindra Bank declined 1-
2% while that of HDFC Bank ended up 0.6% ahead of its Apr-Jun earnings next
week.
• Among other stocks, SKS Microfinance and VST Industries surged 10% and 9%
respectively.
Saturday, July 9, 2011
Key Domestic Economic Data Releases
Industrial production
As per new series grows by 6.30% in April against rise of 8.80% last month
Eight Infra Industries
Posts growth of 5.30% in May against 4.60% growth in April
Exports
Jump by 56 93% in to Source: Mospi 56.93% May USD 25.94 bn
Headline WPI inflation
At 9.06% for May against 8.66% in April
Rupee strengthens
By 0.80% over the month to Rs 44.70 against US dollar
Forex reserves dropped by USD 1.20 bn to USD 309.02 bn as on June 24 from May 27
Bank credit
Stands at Rs 40,01,521 crs as on June 17, growth of 0.50% over the fortnight and rise of 20.70% over the year
As per new series grows by 6.30% in April against rise of 8.80% last month
Eight Infra Industries
Posts growth of 5.30% in May against 4.60% growth in April
Exports
Jump by 56 93% in to Source: Mospi 56.93% May USD 25.94 bn
Headline WPI inflation
At 9.06% for May against 8.66% in April
Rupee strengthens
By 0.80% over the month to Rs 44.70 against US dollar
Forex reserves dropped by USD 1.20 bn to USD 309.02 bn as on June 24 from May 27
Bank credit
Stands at Rs 40,01,521 crs as on June 17, growth of 0.50% over the fortnight and rise of 20.70% over the year
Key Global Economic Data Releases
US
US economy grows at a 1.9% pace in first quarter of 2011.
ISM Manufacturing for June rises to 55.3 from 53.5 last month
Advance retail sales fall 0.2% in May compared with rise of 0.3% last month
Euro-zone
Euro-zone trade swings to a deficit Euro of 4.1 bn Euros in Apr’11 from 1.6 bn Euros trade surplus in Mar’11 and a deficit of 700 mn Euros in Apr’10
Inflation in 17-nation euro region remain at 2.7% for a second month
German unemployment declines for a 24th straight month in June
Asia
Japan's GDP falls at an annualized 3.5% rate in first quarter of 2011.
China’s inflation accelerates to 5.5% in May’11 to 34-month-high
Bank of Korea raises benchmark seven-day repurchase rate to 3.25% from 3%
US economy grows at a 1.9% pace in first quarter of 2011.
ISM Manufacturing for June rises to 55.3 from 53.5 last month
Advance retail sales fall 0.2% in May compared with rise of 0.3% last month
Euro-zone
Euro-zone trade swings to a deficit Euro of 4.1 bn Euros in Apr’11 from 1.6 bn Euros trade surplus in Mar’11 and a deficit of 700 mn Euros in Apr’10
Inflation in 17-nation euro region remain at 2.7% for a second month
German unemployment declines for a 24th straight month in June
Asia
Japan's GDP falls at an annualized 3.5% rate in first quarter of 2011.
China’s inflation accelerates to 5.5% in May’11 to 34-month-high
Bank of Korea raises benchmark seven-day repurchase rate to 3.25% from 3%
Indian Equity Market Sentiments
Persistently high inflation and RBI’s active monetary policy stance coupled with global recovery uncertainty weighed on investor sentiment. Also, Euro zone issues continued to remain on investor radar. The BSE’s key index breached the psychological 18000 mark
during the month as investors offloaded positions ahead of the earnings season. Investors feared to bet on corporate earnings that seemed to be impacted by higher input and borrowing costs. The index however managed to regain the key level and ended with moderate gains as investors breathed a sigh of relief after Greece took a step closer to avoiding the euro zone’s first sovereign default. Further, FII flows in Indian equities also suggested that risk appetite was back. FIIs turned net buyers in Indian equities to the tune of Rs. 2487 crore after selling equities worth over Rs. 6000 crore in the month of May (Source: www.sebi.gov.in). On the sectoral front, performance was highly skewed. Realty and Oil & Gas shed 7.3% and 4%, respectively. On the other hand, capital goods led with 6.2% gains followed by consumer goods at 4.9% (Source: BSE). Further, weak performance of small and midcap indices suggested that there is still some amount of caution prevailing in the market. Despite the prevailing uncertainty, Indian markets performed better than most of the major global markets.
during the month as investors offloaded positions ahead of the earnings season. Investors feared to bet on corporate earnings that seemed to be impacted by higher input and borrowing costs. The index however managed to regain the key level and ended with moderate gains as investors breathed a sigh of relief after Greece took a step closer to avoiding the euro zone’s first sovereign default. Further, FII flows in Indian equities also suggested that risk appetite was back. FIIs turned net buyers in Indian equities to the tune of Rs. 2487 crore after selling equities worth over Rs. 6000 crore in the month of May (Source: www.sebi.gov.in). On the sectoral front, performance was highly skewed. Realty and Oil & Gas shed 7.3% and 4%, respectively. On the other hand, capital goods led with 6.2% gains followed by consumer goods at 4.9% (Source: BSE). Further, weak performance of small and midcap indices suggested that there is still some amount of caution prevailing in the market. Despite the prevailing uncertainty, Indian markets performed better than most of the major global markets.
Thursday, July 7, 2011
Market on Way
At 7th July 2011 market go up very sharply now market on track with bull to try achieve a new level today sensex trying to touch a big resistance of 19200 for big upword movement.
According to me that if market stay above 19200 for few days it's pick new high very shortly but here some good mid cap stock move very high level instead of large cap means mid cap gives better return then large cap some good stock are available near 52 week low like Punj Lloyd (77) Suzlon (52).
For investment this is the best time to put your money at right place.
According to me that if market stay above 19200 for few days it's pick new high very shortly but here some good mid cap stock move very high level instead of large cap means mid cap gives better return then large cap some good stock are available near 52 week low like Punj Lloyd (77) Suzlon (52).
For investment this is the best time to put your money at right place.
Tuesday, July 5, 2011
Market Suffer with Heavy Weight Stock
BHEL :
BHEL dropped down more then 5% in a day but Auto support market. Sell BHEL with a target of Rs 1880 and stop loss of Rs 2020, says Ashwani Gujral, technical analyst.
RIL :
Weakness in RIL and negative cues from Asia took their toll on the markets, with both benchmark indices losing about quarter of a percent.
There was good upward movement in auto and some banking counters, which lent support to the indices. The Sensex closed at 18744 (provisional), down 71 points from its previous close, and the Nifty closed at 5631 (provisional), down 20 points. The CNX Midcap index was down 0.4% while the BSE Smallcap index gained 0.2%. The market breadth was positive with advances at 655 against declines of 645 on the NSE
BHEL dropped down more then 5% in a day but Auto support market. Sell BHEL with a target of Rs 1880 and stop loss of Rs 2020, says Ashwani Gujral, technical analyst.
RIL :
Weakness in RIL and negative cues from Asia took their toll on the markets, with both benchmark indices losing about quarter of a percent.
There was good upward movement in auto and some banking counters, which lent support to the indices. The Sensex closed at 18744 (provisional), down 71 points from its previous close, and the Nifty closed at 5631 (provisional), down 20 points. The CNX Midcap index was down 0.4% while the BSE Smallcap index gained 0.2%. The market breadth was positive with advances at 655 against declines of 645 on the NSE
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