Ashok Leyland reported a 157% year-over-year growth in net sales for the first quarter of fiscal year 2011, which was lower than expected. While volumes grew substantially by 178% year-over-year, growth in other business segments was lower than expected. Operating margins of 10% were also lower than expected, though net profits jumped due to higher sales volume and improved operating leverage. The outlook for the domestic commercial vehicle industry remains positive on expected volume growth of 16-18% for fiscal year 2011.
Ashok Leyland reported a 72% year-over-year growth in net sales for the second quarter of fiscal year 2011, driven by a substantial 72% increase in vehicle volumes. However, lower-than-expected growth in other businesses restricted overall revenue growth. Operating margins improved due to higher volumes and operating leverage. Net profit jumped 88.5% on the back of revenue growth and better margins. While outlook for the commercial vehicle industry remains positive, the analyst maintains a neutral rating on Ashok Leyland stock.
Motherson Sumi Systems (MSSL) reported a 32% year-over-year increase in net sales to Rs. 1,905 crores for the first quarter of fiscal year 2011, below expectations. Operating margins increased 370 basis points year-over-year to 9.8% but fell short of expectations and declined sequentially. Net profit for the quarter came in below expectations at Rs. 60 crores due to lower-than-expected revenue growth and margins. Management indicated input costs and currency impacts would be gradually passed on to customers, and the analyst maintains an 'Accumulate' rating while lowering the target price.
- Alembic reported lower than expected sales and profits for 1QFY2011 due to weak performance in its export API segment and slower than expected growth in domestic formulations.
- However, interest costs declined significantly due to lower debt levels and the company's decision to demerge its pharmaceutical business from other businesses is expected to unlock value by allowing each business to focus on its core operations.
- The analyst maintains a 'Buy' rating and has set a target price of Rs. 74 per share based on separate valuations of the demerged pharmaceutical and API businesses as well as the company's land assets.
Exide Industries reported a 35.1% increase in net profit for 1QFY2011 compared to the previous year. Net sales grew 27.5% year-over-year to Rs1,152 crore, exceeding estimates. Earnings before interest, taxes, depreciation, and amortization margins improved from the previous quarter due to a decline in other expenditures. The analyst maintains an "Accumulate" rating for Exide Industries due to reasonable valuations and expects net sales and profit to grow annually over the next two years.
Exide Industries reported a 35.1% increase in net profit for the first quarter of fiscal year 2011. Net sales grew 27.5% due to a substantial increase in both original equipment and replacement auto battery sales. While raw material costs increased, operating margins improved on a quarter-over-quarter basis due to a decline in other expenditures and average lead prices. The analyst maintains an "Accumulate" rating for Exide Industries due to reasonable valuations and expectations for continued double-digit revenue and earnings growth over the next two fiscal years.
Larsen & Toubro (L&T) reported a 17.8% year-over-year increase in net sales to Rs. 9,330.8 crore for the second quarter of FY2011, exceeding estimates. However, operating margins of 10.8% were below expectations due to higher staff costs. Net profit of Rs. 650.2 crore was marginally above estimates. While top-line growth was strong, margins were impacted by costs, resulting in net profit slightly surpassing estimates. Order inflows were in line with expectations.
Tech Mahindra reported a 4.2% quarter-over-quarter decline in revenue for the first quarter of fiscal year 2011, which was attributed to adverse currency movements and slower client decision making. The company's profitability declined as well, with earnings before interest, taxes, depreciation, and amortization margins contracting 480 basis points and net income declining 36.4% compared to the previous quarter. However, revenue grew 1.9% year-over-year and management expects growth to be led by strong volume increases from large transformational deals in the pipeline. While the outlook remains positive, uncertainties around currency fluctuations and aggressive hiring could pressure margins going forward.
FAG Bearing recorded strong results for the second quarter of 2010, with net sales growing 35% year-over-year to Rs. 273 crore, beating estimates. Operating profit increased 66% to Rs. 52 crore due to lower raw material costs and improved operating leverage. Net profit surged 82% to Rs. 33.8 crore, aided by robust top-line growth and lower taxes. The analyst maintains a "Buy" rating and revised earnings estimates upward based on the company's solid performance.
Ashok Leyland reported a 72% year-over-year growth in net sales for the second quarter of fiscal year 2011, driven by a substantial 72% increase in vehicle volumes. However, lower-than-expected growth in other businesses restricted overall revenue growth. Operating margins improved due to higher volumes and operating leverage. Net profit jumped 88.5% on the back of revenue growth and better margins. While outlook for the commercial vehicle industry remains positive, the analyst maintains a neutral rating on Ashok Leyland stock.
Motherson Sumi Systems (MSSL) reported a 32% year-over-year increase in net sales to Rs. 1,905 crores for the first quarter of fiscal year 2011, below expectations. Operating margins increased 370 basis points year-over-year to 9.8% but fell short of expectations and declined sequentially. Net profit for the quarter came in below expectations at Rs. 60 crores due to lower-than-expected revenue growth and margins. Management indicated input costs and currency impacts would be gradually passed on to customers, and the analyst maintains an 'Accumulate' rating while lowering the target price.
- Alembic reported lower than expected sales and profits for 1QFY2011 due to weak performance in its export API segment and slower than expected growth in domestic formulations.
- However, interest costs declined significantly due to lower debt levels and the company's decision to demerge its pharmaceutical business from other businesses is expected to unlock value by allowing each business to focus on its core operations.
- The analyst maintains a 'Buy' rating and has set a target price of Rs. 74 per share based on separate valuations of the demerged pharmaceutical and API businesses as well as the company's land assets.
Exide Industries reported a 35.1% increase in net profit for 1QFY2011 compared to the previous year. Net sales grew 27.5% year-over-year to Rs1,152 crore, exceeding estimates. Earnings before interest, taxes, depreciation, and amortization margins improved from the previous quarter due to a decline in other expenditures. The analyst maintains an "Accumulate" rating for Exide Industries due to reasonable valuations and expects net sales and profit to grow annually over the next two years.
Exide Industries reported a 35.1% increase in net profit for the first quarter of fiscal year 2011. Net sales grew 27.5% due to a substantial increase in both original equipment and replacement auto battery sales. While raw material costs increased, operating margins improved on a quarter-over-quarter basis due to a decline in other expenditures and average lead prices. The analyst maintains an "Accumulate" rating for Exide Industries due to reasonable valuations and expectations for continued double-digit revenue and earnings growth over the next two fiscal years.
Larsen & Toubro (L&T) reported a 17.8% year-over-year increase in net sales to Rs. 9,330.8 crore for the second quarter of FY2011, exceeding estimates. However, operating margins of 10.8% were below expectations due to higher staff costs. Net profit of Rs. 650.2 crore was marginally above estimates. While top-line growth was strong, margins were impacted by costs, resulting in net profit slightly surpassing estimates. Order inflows were in line with expectations.
Tech Mahindra reported a 4.2% quarter-over-quarter decline in revenue for the first quarter of fiscal year 2011, which was attributed to adverse currency movements and slower client decision making. The company's profitability declined as well, with earnings before interest, taxes, depreciation, and amortization margins contracting 480 basis points and net income declining 36.4% compared to the previous quarter. However, revenue grew 1.9% year-over-year and management expects growth to be led by strong volume increases from large transformational deals in the pipeline. While the outlook remains positive, uncertainties around currency fluctuations and aggressive hiring could pressure margins going forward.
FAG Bearing recorded strong results for the second quarter of 2010, with net sales growing 35% year-over-year to Rs. 273 crore, beating estimates. Operating profit increased 66% to Rs. 52 crore due to lower raw material costs and improved operating leverage. Net profit surged 82% to Rs. 33.8 crore, aided by robust top-line growth and lower taxes. The analyst maintains a "Buy" rating and revised earnings estimates upward based on the company's solid performance.
Tata Motors reported strong results for the first quarter of fiscal year 2011. Consolidated net sales grew 65% year-over-year to Rs. 27,056 crore, driven by higher domestic and JLR volumes as well as a 27% increase in JLR realizations. Consolidated operating profit jumped 667% to Rs. 3,855 crore and operating margins increased substantially to 14.2% compared to 3.1% in the prior year period. However, standalone performance was marginally below expectations with net sales up 63% to Rs. 10,416 crore and net profit falling 23% to Rs. 396 crore due to lower other income. While volumes grew 48% driven by strong
For 2QFY2011, TVS Motor (TVSM) reported:
1) Net sales growth of 43% year-over-year to Rs. 1,616 crore, slightly above estimates, driven by a 33.4% increase in total volumes.
2) EBITDA margin expanded 20 basis points quarter-over-quarter to 6.7%, marginally below estimates.
3) Net profit grew 123.1% year-over-year to Rs. 54.8 crore, above expectations, due to lower interest costs and tax rates.
The analyst maintains earnings estimates for TVSM but remains Neutral on the stock, believing the recent run-up factors in expected growth over
Deccan Chronicle Holdings (DCHL) reported a 7% year-over-year increase in revenue and an 18.4% increase in profits for the first quarter of fiscal year 2011. Revenue was in line with expectations at Rs231.8 crore, driven by a 7% increase in advertising revenue. Profits increased due to a 281 basis point expansion in operating margins and a lower effective tax rate of 14%. The company continued to benefit from low newsprint prices. While advertising revenue growth was driven by higher rates, management expects advertising volumes to recover going forward. DCHL maintained its buy rating based on attractive valuations and growth prospects.
For the first quarter of fiscal year 2011 (1QFY2011):
1) Hero Honda's net sales grew 12% year-over-year to Rs. 4,297 crore, in line with estimates, while operating profit fell 7% and net profit declined 2% due to higher input costs.
2) Operating margins decreased significantly to 14% from 17% in the prior year quarter due to a 345 basis point rise in raw material costs.
3) The analyst maintains revenue growth estimates but revises operating margin forecasts lower to account for pressure from increasing raw material prices.
1) For 1QFY2012, Persistent Systems reported revenues of ₹224 crore, up 5.2% over the previous quarter and 23.6% over the same period last year.
2) EBITDA was ₹40 crore, up 5.3% over the previous quarter but margins declined.
3) PAT was ₹28 crore, down 16.8% over the previous quarter due to higher taxes.
4) Management maintained revenue guidance of 29% growth for FY2012 and expects PAT to remain flat despite higher tax rates.
TVS Motor reported a 41% increase in net sales for the first quarter of fiscal year 2011 compared to the same period last year, driven by a 33% rise in total volumes. However, operating profit was slightly below expectations due to lower-than-expected operating margins. While earnings grew substantially year-over-year due to margin expansion and lower taxes, the report maintains a neutral rating on the stock given its recent price increase. Future performance will depend on consistent volume growth, improved market share, and higher margins.
1) Anant Raj Industries reported a 203.4% quarter-over-quarter growth in net sales to Rs. 103 crore for the first quarter of FY2011, though sales were down 1.5% from the prior year. However, margins declined due to a change in accounting practices.
2) The company launched two residential projects during the quarter and has already sold all units in one project and 50% of units in the other.
3) Anant Raj maintains a strong balance sheet with a net cash position and fully paid land banks, providing flexibility for future growth.
Ashok Leyland reported a 141.3% year-over-year growth in net sales to Rs2,939 crore for the fourth quarter of fiscal year 2010, in line with expectations. Net profit grew 317.6% year-over-year to Rs222.7 crore, higher than expected due to better operating margins and a change in depreciation policy. Operating margins increased 345 basis points due to price hikes, lower raw material prices, and cost reduction efforts. The company expects commercial vehicle industry volumes to grow 15-18% in fiscal year 2011.
Rallis India reported 1QFY2011 results that were below expectations due to lower-than-estimated EBITDA margins of 11.6%, despite revenue growth of 21.8% that exceeded estimates. While revenue growth was driven by strong domestic demand and export revival, higher other expenses restricted improvement in operating margins. Looking ahead, management expects industry growth of 10-12% in FY2011 on expectations of normal monsoons, and the company is positioned to outpace industry growth. However, the brokerage maintains a Neutral rating given margins were below estimates and the stock is trading at fair valuations.
Nagarjuna Construction Company (NCC) reported disappointing 1QFY2011 results with revenues growing only 8.5% year-over-year, below expectations. Operating margins were in line with estimates at 9.7% however. The company maintained full-year revenue guidance of Rs5,800cr. NCC has a strong order backlog of Rs16,051cr, providing revenue visibility. While results were below estimates, management sees potential in its diversified operations and order backlog. The stock remains undervalued and analysts maintain a "Buy" rating given growth opportunities.
Maruti Suzuki reported poor performance for 1QFY2011. Net sales came in marginally below estimates due to lower export realization. Operating profit was substantially impacted by a large contraction in operating margins. Higher royalty charges and increased input costs hurt operating performance. Net profit declined significantly year-over-year and missed estimates due to lower export realization, margin contraction, and higher costs.
PTC India reported a 121.8% quarter-over-quarter growth in net revenue to Rs. 2,758 cr for 1QFY2011, driven by a 36.7% year-over-year increase in sales volume. Operating profit grew 194.2% qoq and 85.3% yoy to Rs. 28 cr due to higher trading margins. However, net profit declined 16.7% yoy to Rs. 28 cr due to lower other income and higher taxes. Going forward, the company expects further volume growth as new projects come online and higher trading margins will boost profits.
Bharat Forge reported strong results for 1QFY2011 with net sales growing 75.7% year-over-year to Rs 630.1 crore, beating estimates. Operating margins improved significantly to 25.2% due to lower raw material costs and higher utilization levels. Net profit was Rs 59.4 crore, exceeding expectations due to improved volumes and operating leverage. The analyst recommends accumulating the stock given the better-than-expected performance and revised upward estimates.
GIPCL reported a 42.3% year-over-year increase in net profit to Rs42cr for the first quarter of fiscal year 2011, despite flat revenues. The bottom line growth was driven by lower tax expenses from tax refunds received for prior years. Operating profit grew 3.3% to Rs64cr on better realizations. The company maintains a buy rating with a target price of Rs135, expecting revenue and profit to grow at a CAGR of 32.5% and 28.3% through fiscal year 2012 driven by new plant capacity additions.
1) For 1QFY2011, Punj Lloyd posted disappointing results with net sales declining 41.7% year-over-year. Operating profits declined 56.1% and the company reported a net loss of Rs 30.6 crore.
2) The top-line was lower than expected, leading the company to downgrade its FY2011 and FY2012 revenue estimates. Problem orders like Ensus and Heera are now out of the picture.
3) While past performance was weak, the outlook is more positive as slow-moving orders have picked up and most challenges are now behind the company. With many negatives priced in, the analyst maintains a "Buy" rating on expectations of improved performance in F
BHEL reported strong results for the first quarter of fiscal year 2011, with revenues growing 16% and profits growing 42% over the same quarter last year. The bottom line growth was driven by lower raw material costs and improved operating efficiencies. While revenue growth was moderate, earnings before interest, taxes, depreciation, and amortization grew substantially due to a 350 basis point expansion in operating margins. Management has guided that order inflows for the full fiscal year will be between Rs58,000-60,000 crore and the order backlog remains robust at Rs148,000 crore as of the end of the quarter. However, competition is increasing in the power equipment market, which could limit BHEL's ability
JK Tyre reported a 29.7% increase in net sales for the first quarter of FY2011 compared to the same period last year, driven by a 15.7% growth in volume and a 13% increase in net sales realization. However, operating profit declined 31.4% due to a sharp rise in raw material prices, particularly rubber. The operating margin contracted by 558 basis points. Net profit fell 52.1% but was better than estimates. Despite the margin pressure, the company maintained a buy rating given its attractive valuation.
Anant Raj Industries' (ARIL) 4QFY2010 results were below expectations due to a delay in launching a premium residential project. Rental income grew 10.6% but profit fell 53.9% quarter-over-quarter. The analyst downgraded earnings estimates for FY2011-FY2012 to account for the delayed project launch. However, ARIL has a strong development pipeline and the analyst maintains a Buy rating due to ARIL's low-cost land bank and strong balance sheet.
Larsen & Toubro (L&T) reported modest results for the first quarter of fiscal year 2011 that were below analyst expectations on revenue but positively surprised on margins. Revenue grew 6.4% year-over-year to Rs. 7,885 crore, below estimates, due to flat performance in the engineering and construction segment. However, operating margins expanded significantly by 170 basis points due to lower subcontracting costs. The order backlog remained strong at Rs. 1,07,816 crore as of June 30, 2010 and order inflows were led by the power segment. While most positives are priced into the stock, further upside could come from value unlocking at subsidiary levels.
JK Lakshmi Cement (JKLC) reported a 1,663bp year-over-year decline in operating margin to 17.4% in the first quarter of fiscal year 2011 due to an 8.7% fall in realizations and a 36% increase in power and fuel costs. Net profit declined 78.6% year-over-year to Rs. 17 crore. The analyst maintains a "Buy" rating on JKLC, revising the target price to Rs. 92, expecting the company to face relatively less pricing pressure due to its concentration in high-growth northern and eastern regions and benefit from increasing captive power capacity.
Reliance Industries reported lower-than-expected earnings for 1QFY2011. While net operating income rose 86.7% year-over-year due to growth in refining revenues, EBITDA was below estimates due to lower petrochemical sales volumes and refining margins. Net profit grew 32.3% year-over-year, meeting estimates. The analyst maintains a 'Buy' rating based on the company's growth outlook and believes it is undervalued relative to its peers.
JP Associates reported a 51.8% year-over-year increase in net sales for the first quarter of FY2011, driven by strong growth in the cement, construction, and real estate verticals. However, operating margins declined significantly from 28% to 21.2% due to margin pressure, resulting in a 57.6% decrease in recurring earnings. While reported profits were up 5% due to exceptional gains, underlying earnings were down. The analyst maintains a buy rating but expects margins to recover, and forecasts JP Associates will become one of the fastest growing conglomerates in cement, power, and real estate.
Tata Motors reported strong results for the first quarter of fiscal year 2011. Consolidated net sales grew 65% year-over-year to Rs. 27,056 crore, driven by higher domestic and JLR volumes as well as a 27% increase in JLR realizations. Consolidated operating profit jumped 667% to Rs. 3,855 crore and operating margins increased substantially to 14.2% compared to 3.1% in the prior year period. However, standalone performance was marginally below expectations with net sales up 63% to Rs. 10,416 crore and net profit falling 23% to Rs. 396 crore due to lower other income. While volumes grew 48% driven by strong
For 2QFY2011, TVS Motor (TVSM) reported:
1) Net sales growth of 43% year-over-year to Rs. 1,616 crore, slightly above estimates, driven by a 33.4% increase in total volumes.
2) EBITDA margin expanded 20 basis points quarter-over-quarter to 6.7%, marginally below estimates.
3) Net profit grew 123.1% year-over-year to Rs. 54.8 crore, above expectations, due to lower interest costs and tax rates.
The analyst maintains earnings estimates for TVSM but remains Neutral on the stock, believing the recent run-up factors in expected growth over
Deccan Chronicle Holdings (DCHL) reported a 7% year-over-year increase in revenue and an 18.4% increase in profits for the first quarter of fiscal year 2011. Revenue was in line with expectations at Rs231.8 crore, driven by a 7% increase in advertising revenue. Profits increased due to a 281 basis point expansion in operating margins and a lower effective tax rate of 14%. The company continued to benefit from low newsprint prices. While advertising revenue growth was driven by higher rates, management expects advertising volumes to recover going forward. DCHL maintained its buy rating based on attractive valuations and growth prospects.
For the first quarter of fiscal year 2011 (1QFY2011):
1) Hero Honda's net sales grew 12% year-over-year to Rs. 4,297 crore, in line with estimates, while operating profit fell 7% and net profit declined 2% due to higher input costs.
2) Operating margins decreased significantly to 14% from 17% in the prior year quarter due to a 345 basis point rise in raw material costs.
3) The analyst maintains revenue growth estimates but revises operating margin forecasts lower to account for pressure from increasing raw material prices.
1) For 1QFY2012, Persistent Systems reported revenues of ₹224 crore, up 5.2% over the previous quarter and 23.6% over the same period last year.
2) EBITDA was ₹40 crore, up 5.3% over the previous quarter but margins declined.
3) PAT was ₹28 crore, down 16.8% over the previous quarter due to higher taxes.
4) Management maintained revenue guidance of 29% growth for FY2012 and expects PAT to remain flat despite higher tax rates.
TVS Motor reported a 41% increase in net sales for the first quarter of fiscal year 2011 compared to the same period last year, driven by a 33% rise in total volumes. However, operating profit was slightly below expectations due to lower-than-expected operating margins. While earnings grew substantially year-over-year due to margin expansion and lower taxes, the report maintains a neutral rating on the stock given its recent price increase. Future performance will depend on consistent volume growth, improved market share, and higher margins.
1) Anant Raj Industries reported a 203.4% quarter-over-quarter growth in net sales to Rs. 103 crore for the first quarter of FY2011, though sales were down 1.5% from the prior year. However, margins declined due to a change in accounting practices.
2) The company launched two residential projects during the quarter and has already sold all units in one project and 50% of units in the other.
3) Anant Raj maintains a strong balance sheet with a net cash position and fully paid land banks, providing flexibility for future growth.
Ashok Leyland reported a 141.3% year-over-year growth in net sales to Rs2,939 crore for the fourth quarter of fiscal year 2010, in line with expectations. Net profit grew 317.6% year-over-year to Rs222.7 crore, higher than expected due to better operating margins and a change in depreciation policy. Operating margins increased 345 basis points due to price hikes, lower raw material prices, and cost reduction efforts. The company expects commercial vehicle industry volumes to grow 15-18% in fiscal year 2011.
Rallis India reported 1QFY2011 results that were below expectations due to lower-than-estimated EBITDA margins of 11.6%, despite revenue growth of 21.8% that exceeded estimates. While revenue growth was driven by strong domestic demand and export revival, higher other expenses restricted improvement in operating margins. Looking ahead, management expects industry growth of 10-12% in FY2011 on expectations of normal monsoons, and the company is positioned to outpace industry growth. However, the brokerage maintains a Neutral rating given margins were below estimates and the stock is trading at fair valuations.
Nagarjuna Construction Company (NCC) reported disappointing 1QFY2011 results with revenues growing only 8.5% year-over-year, below expectations. Operating margins were in line with estimates at 9.7% however. The company maintained full-year revenue guidance of Rs5,800cr. NCC has a strong order backlog of Rs16,051cr, providing revenue visibility. While results were below estimates, management sees potential in its diversified operations and order backlog. The stock remains undervalued and analysts maintain a "Buy" rating given growth opportunities.
Maruti Suzuki reported poor performance for 1QFY2011. Net sales came in marginally below estimates due to lower export realization. Operating profit was substantially impacted by a large contraction in operating margins. Higher royalty charges and increased input costs hurt operating performance. Net profit declined significantly year-over-year and missed estimates due to lower export realization, margin contraction, and higher costs.
PTC India reported a 121.8% quarter-over-quarter growth in net revenue to Rs. 2,758 cr for 1QFY2011, driven by a 36.7% year-over-year increase in sales volume. Operating profit grew 194.2% qoq and 85.3% yoy to Rs. 28 cr due to higher trading margins. However, net profit declined 16.7% yoy to Rs. 28 cr due to lower other income and higher taxes. Going forward, the company expects further volume growth as new projects come online and higher trading margins will boost profits.
Bharat Forge reported strong results for 1QFY2011 with net sales growing 75.7% year-over-year to Rs 630.1 crore, beating estimates. Operating margins improved significantly to 25.2% due to lower raw material costs and higher utilization levels. Net profit was Rs 59.4 crore, exceeding expectations due to improved volumes and operating leverage. The analyst recommends accumulating the stock given the better-than-expected performance and revised upward estimates.
GIPCL reported a 42.3% year-over-year increase in net profit to Rs42cr for the first quarter of fiscal year 2011, despite flat revenues. The bottom line growth was driven by lower tax expenses from tax refunds received for prior years. Operating profit grew 3.3% to Rs64cr on better realizations. The company maintains a buy rating with a target price of Rs135, expecting revenue and profit to grow at a CAGR of 32.5% and 28.3% through fiscal year 2012 driven by new plant capacity additions.
1) For 1QFY2011, Punj Lloyd posted disappointing results with net sales declining 41.7% year-over-year. Operating profits declined 56.1% and the company reported a net loss of Rs 30.6 crore.
2) The top-line was lower than expected, leading the company to downgrade its FY2011 and FY2012 revenue estimates. Problem orders like Ensus and Heera are now out of the picture.
3) While past performance was weak, the outlook is more positive as slow-moving orders have picked up and most challenges are now behind the company. With many negatives priced in, the analyst maintains a "Buy" rating on expectations of improved performance in F
BHEL reported strong results for the first quarter of fiscal year 2011, with revenues growing 16% and profits growing 42% over the same quarter last year. The bottom line growth was driven by lower raw material costs and improved operating efficiencies. While revenue growth was moderate, earnings before interest, taxes, depreciation, and amortization grew substantially due to a 350 basis point expansion in operating margins. Management has guided that order inflows for the full fiscal year will be between Rs58,000-60,000 crore and the order backlog remains robust at Rs148,000 crore as of the end of the quarter. However, competition is increasing in the power equipment market, which could limit BHEL's ability
JK Tyre reported a 29.7% increase in net sales for the first quarter of FY2011 compared to the same period last year, driven by a 15.7% growth in volume and a 13% increase in net sales realization. However, operating profit declined 31.4% due to a sharp rise in raw material prices, particularly rubber. The operating margin contracted by 558 basis points. Net profit fell 52.1% but was better than estimates. Despite the margin pressure, the company maintained a buy rating given its attractive valuation.
Anant Raj Industries' (ARIL) 4QFY2010 results were below expectations due to a delay in launching a premium residential project. Rental income grew 10.6% but profit fell 53.9% quarter-over-quarter. The analyst downgraded earnings estimates for FY2011-FY2012 to account for the delayed project launch. However, ARIL has a strong development pipeline and the analyst maintains a Buy rating due to ARIL's low-cost land bank and strong balance sheet.
Larsen & Toubro (L&T) reported modest results for the first quarter of fiscal year 2011 that were below analyst expectations on revenue but positively surprised on margins. Revenue grew 6.4% year-over-year to Rs. 7,885 crore, below estimates, due to flat performance in the engineering and construction segment. However, operating margins expanded significantly by 170 basis points due to lower subcontracting costs. The order backlog remained strong at Rs. 1,07,816 crore as of June 30, 2010 and order inflows were led by the power segment. While most positives are priced into the stock, further upside could come from value unlocking at subsidiary levels.
JK Lakshmi Cement (JKLC) reported a 1,663bp year-over-year decline in operating margin to 17.4% in the first quarter of fiscal year 2011 due to an 8.7% fall in realizations and a 36% increase in power and fuel costs. Net profit declined 78.6% year-over-year to Rs. 17 crore. The analyst maintains a "Buy" rating on JKLC, revising the target price to Rs. 92, expecting the company to face relatively less pricing pressure due to its concentration in high-growth northern and eastern regions and benefit from increasing captive power capacity.
Reliance Industries reported lower-than-expected earnings for 1QFY2011. While net operating income rose 86.7% year-over-year due to growth in refining revenues, EBITDA was below estimates due to lower petrochemical sales volumes and refining margins. Net profit grew 32.3% year-over-year, meeting estimates. The analyst maintains a 'Buy' rating based on the company's growth outlook and believes it is undervalued relative to its peers.
JP Associates reported a 51.8% year-over-year increase in net sales for the first quarter of FY2011, driven by strong growth in the cement, construction, and real estate verticals. However, operating margins declined significantly from 28% to 21.2% due to margin pressure, resulting in a 57.6% decrease in recurring earnings. While reported profits were up 5% due to exceptional gains, underlying earnings were down. The analyst maintains a buy rating but expects margins to recover, and forecasts JP Associates will become one of the fastest growing conglomerates in cement, power, and real estate.
Sadbhav Engineering reported a 42% increase in net sales and 83.8% increase in net profit for the first quarter of fiscal year 2011 compared to the previous year. The company saw robust growth due to a rise in order book over the last few quarters and has guided for over 35% revenue growth over the next 12 months. However, the analyst downgraded the stock to Reduce due to rich valuations and concerns over potential execution challenges due to a record high order backlog.
Blue Star reported a 25.2% year-over-year increase in net sales for the first quarter of fiscal year 2011, though margins declined and profit fell. While sales grew across all segments, higher input costs and lower commission income caused operating margins to drop 281 basis points year-over-year to 9.2%. Net profit declined 10% year-over-year due to the margin pressure and a change in accounting policy. However, the company's order backlog grew nearly 15% and the outlook for large orders remains positive.
Automotive Axles (AAL) posted strong results for the third quarter of 2010, with net sales up 198% year-over-year to Rs196 crore, above estimates. Operating profit margin increased 252 basis points to 14% due to improved operating leverage. Net profit increased 442% to Rs14.6 crore, beating estimates on higher margins. The company benefited from an 80% year-over-year increase in medium and heavy commercial vehicle volumes, which account for 95% of its revenue. The analyst maintains a "Buy" rating, expecting continued recovery in commercial vehicle demand to drive robust earnings growth over the next two years.
Steel Authority of India reported a 1.7% decline in EBITDA to Rs. 1,843 cr for the first quarter of FY2011, below Angel Research's estimate, due to lower sales volume and higher staff costs. Net profit declined 11.3% to Rs. 1,177 cr for the same reasons. While steel prices increased, sales volume fell 15.5% from a year ago. Staff costs rose sharply due to additional provisions for employee benefits. Going forward, the company is expected to benefit from strong domestic demand, but capacity expansion benefits will only be seen after FY2012. Angel Research maintains a Neutral rating on the stock.
Ceat reported its results for the first quarter of fiscal year 2011. While the company's net sales grew 15.4% year-over-year to Rs. 778 crore, its operating profit declined 61% to Rs. 41 crore due to a sharp rise in raw material prices. The operating margin was 5.3% compared to 15.4% in the prior year quarter. Net profit fell 77% to Rs. 13.9 crore. However, results were marginally better than expected. The analyst maintains a 'Buy' rating on Ceat based on strong demand fundamentals in the tyre industry and expectations that margins will recover as the business model shifts towards more capital-intensive radial tyres.
1) ONGC reported lower than expected results for the first quarter of fiscal year 2011 due to lower crude oil and natural gas production as well as a decline in net realizations.
2) Total operating income declined 8.7% year-over-year to Rs. 13,823 crore, while net profit declined 24.5% to Rs. 3,661 crore.
3) While performance is expected to improve going forward due to fuel price reforms, the analyst maintains an "Accumulate" rating on ONGC shares due to limited downside risk and potential for further reforms in the oil sector.
BGR Energy Systems reported strong results for the first quarter of fiscal year 2011. Revenue grew 191% year-over-year to Rs. 905 crore, driven by execution of EPC projects. Net profit increased 205.6% to Rs. 61 crore. Margins were compressed due to higher raw material costs but execution of large EPC contracts provides good revenue visibility. The company maintains its neutral rating on BGR Energy Systems due to its order backlog, transformation into a full EPC provider through potential JV with Hitachi, and growth opportunities in the power sector.
Subros reported an 11.6% increase in net sales for the first quarter of FY2011 compared to the same period last year, aided by a 13.8% growth in volumes. Operating profit rose 17.3% while net profit jumped 117.1% due to lower raw material costs and expansion in operating margins. The company maintained its outlook for 15% annual volume growth over the next two years but expects pricing pressure to limit revenue growth to around 10% annually. The analyst maintains a 'Buy' rating with a target price of Rs60 per share based on projected earnings growth and reasonable valuation.
Bajaj Auto reported marginally lower-than-expected results for the first quarter of fiscal year 2012, with net sales growth of 22.8% year-over-year driven by a 17.7% increase in volumes. However, operating margins contracted by 145 basis points quarter-over-quarter to 19.1% due to a 150 basis point increase in raw material costs. As a result, net profit grew by 20.5% year-over-year to ₹711 crore, which was slightly below analyst estimates. Going forward, the analyst expects further margin pressure and has revised downward its earnings estimates for fiscal years 2012 and 2013 to factor in higher raw material costs and changes to export incentives.
Bajaj Auto reported strong results for the first quarter of fiscal year 2011. The company's top line was marginally above expectations, driven by a 70% year-over-year increase in total volumes. EBITDA margins expanded slightly by 50 basis points year-over-year to 20%. Net profit increased 101% year-over-year to Rs590 crore, beating estimates, aided by higher other income and improved operating leverage. Overall, robust volume growth and margin expansion led to better-than-expected financial performance during the quarter.
Simplex Infrastructures posted lackluster 1QFY2011 results with 5.8% revenue growth and operating margins of 10.4%, below analyst expectations. The company's order backlog remains robust at Rs.12,262 crore. While the results were disappointing, the company maintains guidance of 15-20% revenue growth for FY2011. The analyst maintains a Buy rating due to Simplex's diversified order backlog and comfortable balance sheet to fund investments, but lowers the target price to Rs.573 based on a lower forward P/E multiple.
Ultratech Cement reported lower than estimated revenues and profits for the first quarter of fiscal year 2011 due to a decline in sales prices and higher operating expenses. Net sales were down 8.1% year-over-year due to lower volumes and a 4.9% decline in prices. Increased power and freight costs led to a 41.9% fall in operating profits. The analyst maintains a 'Buy' rating, seeing benefits from Ultratech's expanded national presence post an acquisition and expects a recovery in prices. The stock is valued at Rs1,087 based on estimated earnings growth and industry valuation multiples.
Ultratech Cement reported a 5.9% quarter-on-quarter decline in net revenue to Rs. 1,810 crore for 1QFY2011 due to a 3.6% decline in despatches and a 4.9% decline in realizations. Operating profit declined 41.9% year-on-year to Rs. 425 crore due to higher operating expenses from increased power costs and reduced coal supply. Net profit declined 41.9% to Rs. 243 crore for the quarter compared to the prior year period. The company faces pricing pressure due to its exposure to the southern region which was affected by lower demand and supply issues.
Hindalco reported strong results for the first quarter of fiscal year 2011. Revenue grew 29.2% year-over-year to Rs. 2,533 crore, driven by a 12.7% increase in aluminum shipments. Adjusted EBITDA more than doubled to Rs. 263 crore, resulting in adjusted EBITDA margins of 10.4%. However, net profit declined 65% to Rs. 50 crore due to higher interest and tax expenses. Management expects continued growth in demand and benefits from capacity expansions. The stock currently trades at attractive valuations and the analyst maintains a Buy rating with a target price of Rs. 204.
Sadbhav Engineering reported quarterly revenues and profits that were below expectations. Higher depreciation and tax expenses related to the reversal of past tax benefits weighed on profits. The company has a large order backlog that provides visibility, but rich valuations lead the analyst to maintain a Neutral rating on the stock.
The Indian markets are expected to open higher, tracking gains in most Asian markets. Spain has asked for a bailout of up to €100 billion for its banking system. Chinese exports grew more than expected in May. In India, shares extended gains for a fifth session despite weak global cues as major central banks held off on additional stimulus. The key support and resistance levels for the Nifty are 5,023 and 5,114 respectively. L&T has bagged orders worth Rs. 483 crore to build commercial vessels in Qatar. Vedanta Resources has acquired a 24.5% stake in Raykal Aluminium for Rs. 201 crore.
Axis Bank reported a 27.0% year-over-year increase in net profit to Rs. 942 crore for the first quarter of fiscal year 2012, in line with analyst estimates. Business growth momentum slowed as advances declined 7.4% quarter-over-quarter and deposits fell 3.0% quarter-over-quarter, moderating the bank's cash-deposit ratio to 40.5% from 41.1% last quarter. However, asset quality remained healthy with slippage ratio declining to 0.8% and gross and net NPA ratios stable.
1) For 1QFY2012, Electrosteel Castings reported 16.4% sales growth but margins declined due to higher raw material costs. EBITDA fell 18.2% and net profit declined 7.2%.
2) While sales volumes grew, costs increased more due to a rise in raw material costs as a percentage of sales.
3) The company maintains a buy recommendation due to initiatives in steelmaking and backward integration that should lower costs starting in FY2013 and valuation remains attractive.
HT Media reported a 22.7% year-over-year increase in revenue to ₹494 crore for the first quarter of FY2012. Revenue was also up 5.8% quarter-over-quarter. Advertising revenue grew 17% year-over-year, with 18% growth in English and 15% growth in Hindi. Operating profit rose 11.8% year-over-year to ₹87.8 crore due to higher other income and lower tax rates, although operating margins contracted by 174 basis points. The company maintained its Accumulate rating based on expectations of continued revenue growth and margin expansion.
The summary is:
1) The derivative report analyzes the performance of the Nifty futures, options, and key stocks from the previous trading session on July 18, 2011.
2) It provides details on changes in open interest, premium levels, volatility, and turnover for various derivatives contracts.
3) Trading strategies and technical analysis is also given for some stocks along with risk-reward profiles of sample spreads trades for the Nifty.
The market ended lower, with the Sensex and Nifty closing down 0.3%. Mid- and small-cap indices closed higher. Select heavyweights like Hindalco Industries and BHEL gained 1-3%, while TCS and Tata Motors lost 1-2%. In corporate news, Motherson Sumi Systems agreed to acquire an 80% stake in Peguform for €141.5 million. HDFC Bank, Cadila Healthcare, Crompton Greaves, and Ashok Leyland are scheduled to announce their quarterly results. The trend for the day will be decided by whether Nifty trades above or below the levels of 18,533/5,572 in early trade.
- GSM subscriber additions in India continued their declining trend in June 2011, with net additions of 9.6 million, down 10% from the previous month.
- All major operators except BSNL reported a drop in subscriber additions. Bharti and Vodafone each added 2.1 million subscribers.
- The total GSM subscriber base reached 598.8 million in June 2011, with Bharti, Vodafone, Idea and BSNL maintaining their major market shares.
The document provides a technical analysis of the Indian stock market indices Sensex and Nifty for the week of July 16, 2011. It summarizes that the indices declined over 1.5% for the week and are currently trading in a range between 18,326/5496 on the downside and 19,132/5740 on the upside. It notes that a break above or below this range would dictate the direction of the upcoming trend. The analysis also lists pivot levels for 50 Nifty stocks to watch in the coming week.
The document provides a summary of derivative market activity in India for July 18, 2011. Key points include:
- Nifty futures open interest increased 0.67% while Mini Nifty increased 3.48% as the market closed at 5581.10
- Nifty July futures closed at a premium of 5.85 points and August futures at a premium of 22.60 points
- Implied volatility of at-the-money options decreased from 18% to 17.3%
- Total open interest in the market was Rs. 135,158 crore with stock futures open interest at Rs. 34,675 crore.
The indices opened flat but traded choppily throughout the day. Metal, auto and realty stocks declined while IT stocks gained. The indices are currently trading in a range between 18,326-18,810/5496-5653 on the downside and 19,132-19,094/5740-5700 on the upside. A break above these resistance levels could lead to further gains while a break below support could result in losses extending to 17,805-17,950/5350-5400. Pivot levels for 50 Nifty stocks are provided.
- The key Indian stock indices declined slightly, with the Sensex and Nifty closing down 0.3%.
- GSM subscriber additions in India continued their declining trend in June across most major operators such as Idea, Bharti Airtel, and Vodafone. Total GSM subscriber addition was 9.6 million, down 10% from the previous month.
- Tata Motors reported flat annual global sales growth in June 2011 compared to the previous year.
- South Indian Bank reported a 41.2% year-over-year increase in net profit to Rs. 82 crores for the first quarter of fiscal year 2012, slightly below analyst estimates.
- Business growth remained strong, with advances growth of 31.2% and deposits growth of 35.5% year-over-year. However, net interest margins compressed by 29 basis points sequentially to 2.8% due to a sharp rise in the bank's cost of deposits.
- Non-interest income was boosted by treasury gains, but fee income growth was modest. Asset quality was stable with gross and net NPAs rising marginally, and provision coverage at a comfortable 73.1%.
1) Tata Consultancy Services (TCS) reported strong results for the first quarter of fiscal year 2012, outperforming expectations with revenue growth of 6.3% over the previous quarter and 31.4% over the same quarter of the previous fiscal year.
2) A key highlight was 7.4% quarter-over-quarter growth in business volumes. While profit margins declined due to wage hikes, net profit remained flat due to foreign exchange gains.
3) Management maintained a positive outlook, highlighting strong demand environment and deal pipeline, and expects pricing increases later in the fiscal year.
The document summarizes the Indian stock market outlook and performance on July 15, 2011. It reports that domestic indices closed with modest gains of 0.1-0.4%, while global indices declined. Wholesale price inflation in India rose to 9.44% in June 2011, above estimates and persisting above 9% for seven months, driven by increases in primary articles and fuel costs. Key benchmark levels are identified for determining if the market may continue rallying or correct in the near term.
The summary is:
1) The derivative report analyzes the movement in Nifty futures, options, and individual stocks between July 14-15, 2011.
2) Nifty futures open interest decreased while mini Nifty open interest increased as the market closed at 5599.80.
3) Implied volatility of at-the-money options increased from 17.6% to 18%.
The Sensex and Nifty indices opened lower and traded with volatility, closing marginally lower. On the sectoral front, Realty, Banks and Healthcare gained while IT and FMCG fell. The advance-decline ratio favored advancing stocks. On the daily chart, prices tested but did not close above the downward gap area of 18,679-18,589/5,601-5,580 levels. Immediate resistance is seen at 18,735/5,633, while 18,449/5,541 is crucial support.
1) Infosys reported modest revenue growth of 3.2% qoq for 1QFY2012. EBITDA and margins declined due to wage hikes.
2) Guidance for 2QFY2012 revenue growth was lower than expected at 3.5-5% qoq. Annual revenue growth guidance was unchanged.
3) The analyst revised EPS estimates down and cut the target price to INR 3,200 due to macro concerns and muted guidance.
This document summarizes a derivative report from India Research dated July 13, 2011. Some key points:
- The Nifty futures open interest increased 0.51% while Minifty futures open interest rose 8.2% as the market closed at 5526.15.
- Implied volatility of at-the-money options increased from 18% to 19.75%. PCR-OI decreased from 1.20 to 1.15.
- Total open interest of the market is Rs. 125,816 crore and stock futures open interest is Rs. 33,500 crore.
- FII were net sellers of Rs. 969 crore in the cash market segment. Put-call
The daily technical report provides the following information:
1) The Sensex and Nifty indexes opened with a downside gap and remained negative throughout the day, with the realty, IT, and auto sectors among the major losers.
2) On the daily chart, the indexes tested the 20-day simple moving average for support and closed above it, while the RSI and ADX indicators show a negative crossover.
3) The report recommends selling REL. INFRA. futures with a stop loss of Rs. 579.05 and target of Rs. 552.00.
The key points from the document are:
1) Domestic indices tumbled over 1% as global stocks fell on concerns over the spreading eurozone debt crisis.
2) High intraday volatility was seen in the market as it reacted to disappointing industrial production growth data and reports of a cabinet reshuffle.
3) Infosys reported a 4.3% rise in quarterly revenue but margins declined due to wage hikes, while its full-year revenue guidance remained unchanged.
Discover the Future of Dogecoin with Our Comprehensive Guidance36 Crypto
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"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
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After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
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1. 1QFY2011 Result Update| Automobile
July 28 2010
Ashok Leyland NEUTRAL
CMP Rs73
Performance Highlights Target Price -
Y/E March (Rs cr) 1QFY11 1QFY10 % chg (yoy) Angel Est % Diff Investment Period -
Net Sales 2,348 913 157 2,660 (11.7)
S tock Info
Operating Profit 235 11.1 2,017 293 (19.6)
S ector Automobile
OPM (%) 10.0 1.2 881bp 11 (97)bp
Market Cap (R s cr) 9,578
Reported PAT 123 8.0 1,480 155 (21.1)
Beta 1.1
Source: Company, Angel Research
52 Week High / L ow 74/32
Ashok Leyland (ALL) registered a substantial 157% yoy growth in net sales for
Avg. Daily Volume 1,024,177
1QFY2011. However, lower-than-expected growth in other businesses (engine
and spare parts) restricted higher growth. Net average realisation declined due to Face Value (R s ) 1
the increase in excise duty and change in product mix. EBITDA margins came in BS E S ens ex 17,957
lower than our expectation at 10%. Net profit jumped on higher top-line and Nifty 5,398
improved operating leverage. We have revised our estimates upwards by ~3-4%
to account for the lower tax rate. R euters Code AS OK.BO
Bloomberg Code AL @IN
Strong volumes support healthy 157% growth in top-line; OPM’s up yoy on higher
operating leverage: For 1QFY2011, ALL reported a 157% yoy growth in net sales
to Rs2,348cr (Rs913cr), which was below our expectation. The jump in sales came
on the substantial 178% yoy growth in volumes. Net average realisation however, S hareholding P attern (% )
declined by 7.4% yoy owing to lower growth in other non-cyclical businesses like P romoters 38.6
engine and defense. During 1QFY2011, ALL witnessed 881bp yoy increase in MF / Banks / Indian Fls 23.9
EBITDA margin mainly on the back of improved operating leverage. Net profit
FII / NR Is / OCBs 27.9
surged1,480% yoy to Rs123cr (Rs7.8cr) on a low base, robust volume growth and
better operating performance. Indian P ublic / Others 9.6
Outlook and Valuation: Overall outlook for the domestic CV industry is
positive with volumes expected to grow 16-18% yoy in FY2011. A majority of
Abs . (% ) 3m 1yr 3yr
the factors that drive freight demand and consequently M&HCV demand have
turned positive and the CV manufacturers are expected to benefit from the S ens ex 3.3 17.1 17.9
economic recovery going forward. We recommend a Neutral on the stock As hok L eyland 30.0 107.1 94.6
owing to the recent run up in the stock price. Our fair value for ALL works out
to Rs73, at which level the stock would trade at 14x FY2012E earnings. We
prefer Tata Motor in the CV space as it is trading at reasonable discount in
relative terms.
Key Financials
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
Net Sales 6,098 7,407 9,793 11,389
% chg (23.1) 21.5 32.2 16.3
Net Profit 178.8 383.6 575.5 689.8
% chg (60.3) 114.6 50.0 19.9
EBITDA (%) 7.5 10.2 10.4 10.5
EPS (Rs) 1.3 2.9 4.3 5.2
P/E (x) 53.9 25.1 16.8 14.0
Vaishali Jajoo
P/BV (x) 4.6 4.1 3.7 3.2 022-4040 3800 Ext: 344
RoE (%) 6.8 11.9 15.1 16.7 vaishali.jajoo@angeltrade.com
RoCE (%) 6.2 9.2 11.3 12.6
EV/Sales (x) 1.7 1.4 1.1 1.0 Yaresh Kothari
EV/EBITDA (x) 25.3 15.1 11.8 10.1 022-4040 3800 Ext: 313
yareshb.kothari@angeltrade.com
Source: Company, Angel Research
Please refer to important disclosures at the end of this report 1
2. Ashok Leyland |1QFY2011 Result Update
Exhibit 1: Quarterly performance
Y/E March (Rs cr) 1QFY11 1QFY10 % chg FY10 FY09 % chg
Net Sales 2,348 913 157.3 7,407 6,098 21.5
Consumption of RM 1,665.2 611.8 172.2 4,966.7 4,277.9 16.1
(% of Sales) 70.9 67.0 67.1 70.1
Staff Costs 202.5 144.1 40.5 671.6 563.1 19.3
(% of Sales) 8.6 15.8 9.1 9.2
Purchases of TG 69.4 50.9 36.4 244.9 202.2 21.1
(% of Sales) 3.0 5.6 3.3 3.3
Other Expenses 175.5 94.6 85.6 768.7 599.3 28.3
(% of Sales) 7.5 10.4 10.4 9.8
Total Expenditure 2,113 901 134 6,652 5,643 17.9
Operating Profit 235.4 11.1 2,016.9 755.2 456.0 65.6
OPM (%) 10.0 1.2 10.2 7.5
Interest 31.6 25.8 22.6 101.9 160.3 (36.5)
Depreciation 61.5 43.5 41.3 204.1 178.4 14.4
Other Income 4.7 60.6 (92.2) 95.5 91.2 4.7
PBT (excl. Extr. Items) 147.0 2.4 5,926.2 544.8 208.5 161.3
Extr. Income/(Expense) - - - 40.1 11.2 -
PBT (incl. Extr. Items) 147.0 2.4 5,926.2 504.7 197.2 155.9
(% of Sales) 6.3 0.3 6.8 3.2
Provision for Taxation 24.4 (5.3) - 121.1 18.5 556.4
(% of PBT) 16.6 (218.0) 24.0 9.4
Reported PAT 122.6 7.8 1,480.4 383.6 178.8 114.6
PATM (%) 5.2 0.9 5.2 2.9
Equity capital (cr) 133.0 133.0 133.0 133.0
EPS (Rs) 0.9 0.1 1,480.4 2.9 1.3 114.6
Source: Company, Angel Research
Exhibit 2: Quarterly volume performance
Y/E March (Rs cr) 1QFY11 1QFY10 % chg FY10 FY09 % chg
M&HCV Passenger 5,088 2,485 104.7 18,480 19,745 (6.4)
M&HCV Goods 16,039 4,977 222.3 44,348 33,349 33.0
LCV 275 231 19.0 1,247 1,350 (7.6)
Total Volume 21,402 7,693 178.2 64,075 54,444 17.7
Export (Inc. Above) 1,940 903 114.8 5,934 6,812 (12.9)
Source: Company, Angel Research
Strong volumes support healthy 157% growth in top-line: For 1QFY2011, ALL
reported a 157% yoy growth in net sales to Rs2,348cr (Rs913cr), which was below
our expectation. The jump in sales came on the substantial 178% yoy growth in
volumes. Net average realisation however, declined by 7.4% yoy owing to lower
growth in other non-cyclical businesses like engine and defense.
Engine volumes dropped to ~4,000 units (~4,500 units) with revenues of Rs74cr
for 1QFY2011. Defense revenues also declined to Rs12cr (Rs28cr in 4QFY2010),
with the company selling around ~140 kits in 1QFY2011 (~400 kits in
4QFY2010). The spare parts business recorded ~12% yoy growth to Rs137cr in
1QFY2011.
July 28 2010 2
3. Ashok Leyland |1QFY2011 Result Update
Exhibit 3: Net sales up 157% on 178% volume growth Exhibit 4: Revival in M&HCV segment boosts volume
(Rs cr) (%) (Units) (%)
4,000 225 30,000 225
157.3
141.3 178
3,000 150 22,500 150
81.4 139
101
2,000 75 15,000 75
(7.3)
1,000 0 7,500 0
(15.7) (58) (17)
0 (75)
0 (75)
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
Net Sales (LHS) Net Sales Growth (RHS) ALL total volumes yoy change
Source: Company, Angel Research Source: Company, Angel Research
Exhibit 5: Segment-wise market share trend
(%) M&HCV passenger M&HCV goods Total M&HCV
60
43.0
45 39.0 37.9
36.1
29.6
26.6 27.0
30
22.7 23.1
17.1 25.2
24.4
15 19.3 18.5
14.2
0
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
Source: Company, Angel Research, SIAM
OPM up on higher operating leverage: During 1QFY2011, ALL witnessed 881bp
yoy increase in EBITDA margin mainly on the back of increased improved
operating leverage. Staff cost and other expenditure, as a percentage of sales,
improved by 717bp and 289bp yoy, respectively. Raw material cost however,
increased by 12bp yoy and accounted for 73.8% (72.6%) of sales in 1QFY2011.
The company hiked prices to the extent of Rs14,500/vehicle (1.5%) in April 2010,
which helped to reduce the raw material cost pressures to a certain extent. Another
price hike action of ~Rs23,500/vehicle (2.5%) was taken by the company towards
June end 2010, which should further reduce the pressure going forward.
July 28 2010 3
4. Ashok Leyland |1QFY2011 Result Update
Exhibit 6: EBITDA margins up 881bp Exhibit 7: Substantial net profit growth on low base
(%) (Rs cr) (%)
100 240 7.6 8
73.2 73.9 200 5.8 5.2
72.6 70.2 71.4 5.6
75 6
160
50 120 4
80
25 10.5 11.4 12.9 2
10.0
0.9
1.2 40
0
0 0
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11
EBITDA Margin Raw Material Cost/Sales Net Profit (LHS) Net Profit Margin (RHS)
Source: Company, Angel Research Source: Company, Angel Research
Net profit spikes 1,480% on low base: Net profit grew by a substantial 1,480% yoy
to Rs123cr (Rs7.8cr) on a low base, robust volume growth and better operating
performance. Interest cost increased substantially by 22.6% yoy on account of
increase in loans and interest costs. Depreciation also reported 41.3% yoy increase
during the quarter largely due to the ongoing capex. Lower tax rate however,
arrested further contraction in NPM.
Conference Call - Key Highlights
HCV segment growing faster: ALL has been able to post strong volume growth
following revival in demand in the heavy commercial vehicle (HCV) segment.
HCV volumes, which picked up from 4QFY2010, witnessed good traction in
1QFY2011. The HCV segment has been growing faster compared to the other
segments.
Demand pick-up in south: Although ALL has a pan-India presence, it
commands market share of close to 45% in the south. The HCV market in the
south witnessed an uptick during 1QFY2011 and management expects
demand to remain robust for the rest of the year. Management expects
stronger growth in the southern market to help the company increase its
overall market share.
Volume guidance: Management has revised its volume target for FY2011 to
~89,000 units from the earlier forecast of ~85,000 units. This includes
~80,000 of M&HCVs, 1,000 LCVs and about 8,000 units for exports. ALL has
a balance order book of ~1,000 units under the JNNURM and for another
1,000 units.
Increase in market share: ALL recorded ~200bp improvement in market share
in the northern and western regions during 1QFY2011. The company
recorded overall market share of 27% (26.5% in 4QFY10). The regional
market share in the HCV segment, as on 1QFY2011 was as follows: North
26%, South 45%, West 17% and East 10%.
Pantnagar plant update: Only 800 units were manufactured at the
Uttaranchal facility during 1QFY2011. However, the company expects to
manufacture 17,000-18,000 vehicles over the next nine months. The
July 28 2010 4
5. Ashok Leyland |1QFY2011 Result Update
company plans to ramp up production to optimal levels of 4,000 units/month
by March 2011.
Exports: Exports grew by ~100% during the quarter backed by demand from
Sri Lanka and Bangladesh. ALL expects strong demand growth from the
Middle East (Dubai and Saudi Arabia).
The company’s debt levels is pegged at ~Rs2,600cr and cash balance is at
~Rs150-200cr. ALL raised Rs300cr during 1QFY2011.
ALL plans to incur Rs700cr and Rs750cr capex during FY2011 and FY2012,
respectively. The spend will be towards manufacturing the new range of
Neptune engines, next generation cabs and on the joint venture with Nissan
Motor Co for LCV’s.
Management has indicated that the applicable tax rate is MAT. However, the
effective tax rate would be lower than MAT on account of the tax credits
available on research and development spends.
Exhibit 8: ALL-M&HCV passenger volume and market share Exhibit 9: ALL-M&HCV goods volume and market share
(Units) Market share (RHS) M&HCV passenger (%) (Units) Market share (RHS) M&HCV goods (%)
yoy growth (RHS) yoy growth (RHS)
8,000 210 24,000 300
6,000 140 18,000 200
4,000 70 12,000 100
2,000 0 6,000 0
0 (70) 0 (100)
1QFY07
2QFY07
3QFY07
4QFY07
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
1QFY07
2QFY07
3QFY07
4QFY07
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
Source: : Company, SIAM, Angel Research Source: Company, SIAM, Angel Research
July 28 2010 5
6. Ashok Leyland |1QFY2011 Result Update
Investment Arguments
Strong volume growth traction: The strong rebound in CV demand in FY2010,
on account of the revival in the Indian economy aided ALL in clocking higher
growth on a low base. As a result, ALL recorded a healthy 18% yoy growth in
FY2010. With CV demand in its mid cycle, we believe in FY2011 industry
would record double-digit volume growth. We estimate ALL to clock a volume
CAGR of around 21.3% over FY2010-12E.
Pantnagar plant help mitigate margin pressure: Management has indicated
the new tax-free unit at Pantnagar would be relatively more profitable, with
profitability estimated at around 25% higher than the existing plants. Thus,
EBITDA margins are expected to hold up at around 10.5% in FY2012E. The
company expects to manufacture more than 18,000 vehicles from the
Uttaranchal plant in FY2011 and further ramp it to ~45,000 vehicles in
FY2012. Total expenditure at the Uttaranchal plant is expected to be close to
Rs1,100cr, out of which Rs1,000cr has already been spent. This capex would
result in additional capacity of close to 50,000 vehicles per annum. Tax
benefit availed at the Pantnagar plant would help the company in saving
~Rs35,000/vehicle on the net realisation front.
JV contribution yet to crystallise: ALL has entered into an initial agreement to
form a JV with Nissan Motor Company for the development, manufacture and
distribution of LCV products. As ALL has a negligible presence in the LCV
space, this partnership would be positive for it in the long run. ALL expects
vehicle roll outs to start from the JV from 2011. Its JV with John Deere is
expected to start production from October 2010.
July 28 2010 6
7. Ashok Leyland |1QFY2011 Result Update
Outlook and Valuation
Overall outlook for the domestic CV industry is positive with volumes expected
to grow 16-18% yoy in FY2011. A majority of the factors that drive freight
demand and consequently M&HCV demand have turned positive and the CV
manufacturers are expected to benefit from the economic recovery going
forward.
We have revised our estimates upwards by ~3-4% to account for the lower tax
rate.
Exhibit 10: Change in estimates
Y/E March Earlier Estimates Revised Estimates % chg
FY11E FY12E FY11E FY12E FY11E FY12E
Net Sales (Rs cr) 9,790 11,382 9,793 11,389 - 0.1
OPM (%) 10.4 10.5 10.4 10.5 - -
EPS (Rs) 4.2 5.0 4.3 5.2 2.6 3.8
Source: Company, Angel Research
At the CMP of Rs73, the stock is trading at 16.8x FY2011E and 14.0x
FY2012E EPS. We recommend a Neutral on the stock owing to the recent run
up in the stock price. Our fair value for ALL works out to Rs73, at which level
the stock would trade at 14x FY2012E earnings. We prefer Tata Motor in the
CV space as it is trading at reasonable discount in relative terms.
Exhibit 11: Key Assumptions
FY07 FY08 FY09 FY10 FY11E FY12E
M&HCV Passenger (units) 15,445 22,262 19,745 18,480 21,252 23,377
M&HCV Goods (units) 67,296 60,224 33,349 44,348 59,870 65,857
LCV (units) 289 825 1,350 1,247 1,621 5,000
Total Volume (units) 83,030 83,311 54,444 64,075 82,743 94,234
% yoy chg 34.7 0.3 (34.6) 17.7 29.1 13.9
Domestic (units) 77,005 76,025 47,632 58,141 74,469 84,719
Exports (units) 6,025 7,286 6,812 5,934 8,274 9,515
Segment-wise Revenue break-up (Rs cr)
Vehicle 7,776 8,102 5,520 6,746 9,321 11,040
Engines 153 235 442 369 445 519
Spare Parts 547 791 800 885 974 1,071
Services and Others - 13 23 36 22 25
Total Revenue (Rs cr) 8,475 9,142 6,784 8,035 10,762 12,654
Source: Company, Angel Research
Exhibit 12: Angel v/s consensus forecast
Angel estimates Consensus Variation (%)
FY11E FY12E FY11E FY12E FY11E FY12E
Top Line (Rs cr) 9,793 11,389 9,294 10,988 5.4 3.6
EPS (Rs) 4.3 5.2 4.0 5.2 7.1 0.7
Source: Angel Research, Bloomberg
July 28 2010 7
13. Ashok Leyland |1QFY2011 Result Update
Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Disclosure of Interest Statement Ashok Leyland
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)
July 28 2010 13