Pantaloon Retail reported a 25.3% year-over-year growth in net sales to Rs. 2,057.6 crore for the third quarter of fiscal year 2010, below expectations of 30.2% growth. Same store sales growth was 13.9% and 13.2% for value and lifestyle retailing respectively. Operating margins remained flat at 10.5% while net profit grew 62.7% to Rs. 55.9 crore due to sales growth and unchanged interest costs. The analyst maintains an accumulate rating and target price of Rs. 469 based on retail space expansion, revival in consumer sentiment, and organizational restructuring.
Shoppers stop result update 4 qfy2010 040510Angel Broking
Shoppers' Stop reported a 23.1% year-over-year growth in net sales to Rs388.8 crore for the fourth quarter of FY2010. Operating margins expanded substantially by 490 basis points to 6.2% due to cost rationalization measures. Net profit was Rs12.6 crore compared to a loss of Rs24.5 crore in the prior year quarter. For the full year FY2010, net sales grew 11.4% while operating margins improved 600 basis points and the company reported a profit versus a loss in the previous year. While growth prospects remain positive, the analyst recommends a Neutral rating given rich valuations.
Maruti Suzuki reported quarterly results that were below expectations, with net profit growing 170% year-over-year to Rs. 657 crore, lower than projected. Volume growth drove the company's 31% year-over-year increase in net sales to Rs. 8,425 crore for the quarter. Margins increased significantly year-over-year due to improved operating leverage and lower raw material costs, but declined sequentially. The company maintained its annual capex plan of Rs. 9,000 crore to be spent between 2008-2012 for expansion purposes.
McNally Bharat Engineering reported strong growth in 4QFY2010, with sales and profit growth of 19% and 142% respectively, ahead of estimates. This was driven by higher EBITDA margins and lower interest costs. For the full year, standalone sales grew 50% and EBITDA margins improved 80 basis points. Going forward, the company is well positioned for robust growth over the next few years due to its large order backlog of 2.6 times FY2010 revenue. The analyst maintains a 'Buy' recommendation with a revised target price of Rs486.
Bajaj Auto reported strong results for the fourth quarter of fiscal year 2010 that exceeded estimates. Net sales grew 80.5% year-over-year to Rs3,399 crore, driven by an 83.8% increase in volume. Operating profit margin expanded substantially to 22.9% compared to 15.2% in the prior year quarter. Net profit for the quarter was Rs529 crore, up 306% year-over-year and above estimates. For fiscal year 2011, management expects robust volume growth and maintains guidance of 20% operating profit margin despite rising raw material costs.
PTC India reported a 5.4% year-over-year increase in top-line for the fourth quarter of fiscal year 2010, however bottom-line declined 10.7% due to a 26.5% reduction in other income and a 39.2% rise in taxes. While sales volumes grew 46.7% year-over-year, average realizations declined 28% due to falling power prices. Operating profit increased 120.1% on a 40 basis point expansion in margins. The analyst maintains a buy recommendation based on an expected positive impact from new trading margin regulations and a fair value estimate of Rs136 per share.
NIIT reported a 1.9% decline in consolidated net revenues for the fourth quarter of fiscal year 2010 but net income grew 40.2% due to a 400 basis point increase in EBITDA margins. While the company's school learning services and corporate learning services businesses saw revenue declines, its individual learning solutions segment grew revenues by 13.9% driven by growth in the IT and formal training management sectors. Strong margin expansion and improved performance in the individual learning segment helped boost profits despite currency headwinds.
- Blue Star reported a 22.6% year-over-year increase in quarterly revenue to Rs875 crore, slightly ahead of estimates. Operating margins were in line with estimates at 12.8%.
- The company has shifted its strategic focus from IT/ITeS and retail segments to hospital, hotel, and infrastructure segments, which have longer execution periods.
- Order inflows increased 43% year-over-year to Rs704 crore for the quarter, indicating an improved outlook. The analyst maintains an "Accumulate" rating with a target price of Rs425.
Tata Motors reported strong results for the fourth quarter of fiscal year 2010. Consolidated net sales were up 84.6% year-over-year to Rs. 28,978 crore, driven by higher other income and improved performance at subsidiaries like Jaguar Land Rover. Operating profit was Rs. 3,135 crore compared to an operating loss in the prior year. Net profit increased significantly to Rs. 2,228 crore from Rs. 316 crore in 4QFY2009, benefiting from cost cutting measures and higher other income. The results were above expectations due to the company's aggressive cost reductions and good turnaround at key subsidiaries.
Shoppers stop result update 4 qfy2010 040510Angel Broking
Shoppers' Stop reported a 23.1% year-over-year growth in net sales to Rs388.8 crore for the fourth quarter of FY2010. Operating margins expanded substantially by 490 basis points to 6.2% due to cost rationalization measures. Net profit was Rs12.6 crore compared to a loss of Rs24.5 crore in the prior year quarter. For the full year FY2010, net sales grew 11.4% while operating margins improved 600 basis points and the company reported a profit versus a loss in the previous year. While growth prospects remain positive, the analyst recommends a Neutral rating given rich valuations.
Maruti Suzuki reported quarterly results that were below expectations, with net profit growing 170% year-over-year to Rs. 657 crore, lower than projected. Volume growth drove the company's 31% year-over-year increase in net sales to Rs. 8,425 crore for the quarter. Margins increased significantly year-over-year due to improved operating leverage and lower raw material costs, but declined sequentially. The company maintained its annual capex plan of Rs. 9,000 crore to be spent between 2008-2012 for expansion purposes.
McNally Bharat Engineering reported strong growth in 4QFY2010, with sales and profit growth of 19% and 142% respectively, ahead of estimates. This was driven by higher EBITDA margins and lower interest costs. For the full year, standalone sales grew 50% and EBITDA margins improved 80 basis points. Going forward, the company is well positioned for robust growth over the next few years due to its large order backlog of 2.6 times FY2010 revenue. The analyst maintains a 'Buy' recommendation with a revised target price of Rs486.
Bajaj Auto reported strong results for the fourth quarter of fiscal year 2010 that exceeded estimates. Net sales grew 80.5% year-over-year to Rs3,399 crore, driven by an 83.8% increase in volume. Operating profit margin expanded substantially to 22.9% compared to 15.2% in the prior year quarter. Net profit for the quarter was Rs529 crore, up 306% year-over-year and above estimates. For fiscal year 2011, management expects robust volume growth and maintains guidance of 20% operating profit margin despite rising raw material costs.
PTC India reported a 5.4% year-over-year increase in top-line for the fourth quarter of fiscal year 2010, however bottom-line declined 10.7% due to a 26.5% reduction in other income and a 39.2% rise in taxes. While sales volumes grew 46.7% year-over-year, average realizations declined 28% due to falling power prices. Operating profit increased 120.1% on a 40 basis point expansion in margins. The analyst maintains a buy recommendation based on an expected positive impact from new trading margin regulations and a fair value estimate of Rs136 per share.
NIIT reported a 1.9% decline in consolidated net revenues for the fourth quarter of fiscal year 2010 but net income grew 40.2% due to a 400 basis point increase in EBITDA margins. While the company's school learning services and corporate learning services businesses saw revenue declines, its individual learning solutions segment grew revenues by 13.9% driven by growth in the IT and formal training management sectors. Strong margin expansion and improved performance in the individual learning segment helped boost profits despite currency headwinds.
- Blue Star reported a 22.6% year-over-year increase in quarterly revenue to Rs875 crore, slightly ahead of estimates. Operating margins were in line with estimates at 12.8%.
- The company has shifted its strategic focus from IT/ITeS and retail segments to hospital, hotel, and infrastructure segments, which have longer execution periods.
- Order inflows increased 43% year-over-year to Rs704 crore for the quarter, indicating an improved outlook. The analyst maintains an "Accumulate" rating with a target price of Rs425.
Tata Motors reported strong results for the fourth quarter of fiscal year 2010. Consolidated net sales were up 84.6% year-over-year to Rs. 28,978 crore, driven by higher other income and improved performance at subsidiaries like Jaguar Land Rover. Operating profit was Rs. 3,135 crore compared to an operating loss in the prior year. Net profit increased significantly to Rs. 2,228 crore from Rs. 316 crore in 4QFY2009, benefiting from cost cutting measures and higher other income. The results were above expectations due to the company's aggressive cost reductions and good turnaround at key subsidiaries.
Polyplex Corporation reported higher-than-estimated quarterly and annual results. Net sales grew 19.4% year-over-year for the quarter and 9.1% for the full year. Quarterly net profit jumped 50.2% year-over-year due to a substantial increase in other income. For the full year, net profit declined 14.9% but was above estimates. The company trades at a discount to its peers and its Thailand subsidiary, despite an estimated 26% earnings CAGR over the next two years. The analyst maintains a "Buy" rating with a target price of Rs418.
TAJGVK reported an 11.2% year-over-year growth in net sales to Rs63.3cr for the fourth quarter of fiscal year 2010. EBITDA and PAT improved year-over-year due to rising occupancy rates and average room rates. For the full fiscal year 2010, revenues declined 3.5% to Rs229.2cr while EBITDA fell 13.9% and PAT declined 32.1% due to higher interest costs. The analyst maintains a buy rating based on improving industry dynamics and expects the company to benefit from economic recovery in key markets like Hyderabad, Chandigarh, and Chennai.
Bajaj Electricals reported a 19.3% year-over-year increase in quarterly revenue to Rs. 784 crore, slightly ahead of estimates. Revenue growth was driven primarily by the consumer durables division which saw 35.6% growth. However, net profit declined 21.1% to Rs. 37 crore due to additional taxes and a loan write-off. The company maintained a strong order backlog of Rs. 932 crore. While growth outlook remains positive, the analyst maintains a neutral rating given the recent run-up in stock price and expects the stock to trade around 10-12 times estimated earnings.
HUL reported disappointing 1QFY2011 results, with profits declining 4% due to a 34% rise in advertising spending. While revenue grew 7% driven by 11% volume growth, operating margins contracted significantly by 289 basis points. Higher competitive intensity in categories like detergents and soaps drove the increase in advertising. Weak profit growth and uncertain earnings outlook despite modest revenue growth lead us to maintain a reduce rating on the stock.
Graphite India reported a 66% year-over-year increase in 4QFY2010 sales, in line with estimates. Full year FY2010 sales fell 10.1%, lower than expected, due to lower production at the company's German facility. However, operating margins increased to a strong 29.4% for FY2010 due to higher realizations. Going forward, the company is well positioned for growth due to increasing demand from the steel industry and its capacity expansion plans. The report maintains a "Buy" recommendation on the stock based on its attractive valuation and growth outlook.
Subros reported a 15.8% jump in net sales to Rs249cr for the fourth quarter of fiscal year 2010, which was in line with expectations. Volume growth of 48.5% and realization growth of 14.2% drove the top-line growth. Net profit spiked to Rs9cr from Rs0.8cr in the prior year quarter due to robust volumes and lower raw material costs. EBITDA margins expanded substantially by 336 basis points year-over-year to 10.5% due to a 724 basis point decline in raw material costs as a percentage of sales. The company is expected to maintain its leadership position in the domestic car air conditioning market.
Dabur reported a mixed set of results for the first quarter of fiscal year 2011. While revenue growth was strong at 23% due to a record 20% increase in volume, earnings growth disappointed at 17% due to margin contraction and higher taxes. Revenue was boosted by double-digit growth in consumer care division categories like oral care, health supplements, and home care. However, earnings fell short of estimates due to a rise in advertising spending squeezing margins. The company also announced an acquisition and a bonus share issue.
CESC reported a 2.1% year-over-year growth in net sales to Rs770cr in the fourth quarter of fiscal year 2010, aided by a 1.7% increase in sales volume. The company's operating profit margin improved by 409 basis points to 26% during the quarter, helping net profit rise by 6.4% to Rs100cr. For the full fiscal year 2010, CESC's top-line grew by 8% to Rs3,351cr while bottom-line increased 5.6% to Rs433cr. The analyst maintained a "Buy" recommendation on the stock based on its fiscal year 2012 estimated price-to-earnings ratio of 7.4x and price-to-
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.
Balaji Telefilms posted disappointing quarterly results, with its top-line declining 32% year-over-year and 14% quarter-over-quarter due to a decrease in total programming hours as three shows went off air. While average programming rates increased sequentially, the company reported an operating loss for the quarter. Going forward, the company expects financial performance to remain under pressure due to low visibility in its programming slate and reduced programming hours.
Godrej Consumer Products reported strong revenue growth of 48.1% for the fourth quarter, driven primarily by the consolidation of Godrej Sara Lee. However, excluding this contribution, domestic growth was a disappointing 5.3%. Earnings growth of 54.6% was boosted by margin expansion but adjusted earnings grew only 16% excluding Godrej Sara Lee. While international operations grew robustly, growth in the core domestic business of soaps and hair colors slowed. The brokerage maintains an 'Accumulate' rating based on Godrej's wider portfolio and potential for acquisitions but expects growth to moderate going forward.
Marico reported disappointing quarterly results, with top-line growth of only 6% year-over-year and flat earnings growth, below estimates. However, a significant gross margin expansion of 644 basis points year-over-year was a positive surprise. While underlying volume growth remained strong at 14%, top-line growth was constrained by price cuts. The outlook remains neutral given concerns around value growth and slowing growth at Kaya.
1) Colgate reported a 13.4% year-over-year growth in top-line to Rs. 516 crores, in line with estimates. Volume growth was steady at 11%.
2) Earnings grew 39.6% year-over-year to Rs. 114.4 crores, significantly beating estimates. This was driven by a 638 basis point expansion in operating margins to 24.1% due to higher gross margins.
3) The analyst maintains an 'Accumulate' rating and revised target price of Rs. 752, expecting the company to report a 15.1% CAGR in revenue through FY2012, while margins remain stable.
PVR is expected to see strong performance in its exhibition business in the second and third quarters of FY2011, aided by a robust movie pipeline (both domestic and Hollywood films) and substantial screen additions over the last six months. Management expects 14-15 new 3D English movies to be released over the next 18-24 months. Additionally, PVR is looking to unlock value by selling and leasing back its Phoenix Mill property, which could generate around Rs. 80-100 crore in cash. PVR Pictures is also expected to see multi-fold revenue growth in FY2011 with more film productions lined up. Blu-O, PVR's bowling business, aims to have 150 lanes by FY2012 and
TCS reported strong financial results for the 1QFY2011 quarter that exceeded analyst estimates. Revenue grew 6.2% quarter-over-quarter to Rs. 8,217 crore, driven by an 8.1% increase in business volumes. Operating margins declined slightly due to wage increases and currency fluctuations impacting costs. Net profit declined 5.3% due to higher foreign exchange losses and taxes. The analyst maintains a positive outlook due to TCS's strong deal pipeline and hiring growth, but notes concerns around the European economic situation and currency movements. The stock is recommended as an "Accumulate" with a target price of Rs. 920.
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.
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.
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.
Hotel Leela Venture reported a 24.9% year-over-year growth in net sales to Rs105.8 crore for the first quarter of FY2011, driven by higher occupancy rates and average room rates. Operating profit was up 67.5% to Rs31.6 crore due to fixed cost absorption, leading to a significant increase in net profit to Rs9.2 crore from Rs0.4 crore in the prior-year period. Going forward, the company expects to benefit from improving industry dynamics, but its current valuation remains higher than peers.
BGR Energy Systems reported a very strong 4QFY2010 performance, with revenues growing 130.7% and net profit up 130.6% over the previous year. For the full year, revenues grew 59.7% and net profit increased 74.7%. The company maintained a healthy order backlog of Rs10,230cr and expects continued growth in orders. The analyst maintains a Buy recommendation on the stock with a target price of Rs722, noting attractive valuation multiples and expecting revenue and profit to grow at 36.7% and 31.2% CAGR over the next few years.
HDIL reported marginally higher than expected 4QFY2010 results. Revenue was driven by TDR sales of 1.48 million square feet from its Mumbai International Airport project. The company has pre-sold 75% of residential projects launched since FY2009, providing Rs2,600 crore in revenue visibility over FY2010-12. The company plans to launch another 5-6 million square feet in FY2011. While execution of the MIAL project and new launches provide growth visibility, delays in relocating families for the MIAL project phase 1 and recent management changes have hurt the stock price. The analyst maintains a Buy rating with a target price of Rs302 per share.
The document provides a weekly market review covering the period of May 28 - June 4, 2010. It summarizes that the Indian stock market extended its gains during the week, with both major indices ending higher, despite volatility in sessions. Most sectoral indices ended higher, with the exception of metals and realty. Within autos, Maruti and M&M outperformed on strong sales, helping the auto index gain the most. The review also covers FII/FPI flows, mutual fund activity, global market performance and initiates coverage on United Phosphorus with a buy rating.
Polyplex Corporation reported higher-than-estimated quarterly and annual results. Net sales grew 19.4% year-over-year for the quarter and 9.1% for the full year. Quarterly net profit jumped 50.2% year-over-year due to a substantial increase in other income. For the full year, net profit declined 14.9% but was above estimates. The company trades at a discount to its peers and its Thailand subsidiary, despite an estimated 26% earnings CAGR over the next two years. The analyst maintains a "Buy" rating with a target price of Rs418.
TAJGVK reported an 11.2% year-over-year growth in net sales to Rs63.3cr for the fourth quarter of fiscal year 2010. EBITDA and PAT improved year-over-year due to rising occupancy rates and average room rates. For the full fiscal year 2010, revenues declined 3.5% to Rs229.2cr while EBITDA fell 13.9% and PAT declined 32.1% due to higher interest costs. The analyst maintains a buy rating based on improving industry dynamics and expects the company to benefit from economic recovery in key markets like Hyderabad, Chandigarh, and Chennai.
Bajaj Electricals reported a 19.3% year-over-year increase in quarterly revenue to Rs. 784 crore, slightly ahead of estimates. Revenue growth was driven primarily by the consumer durables division which saw 35.6% growth. However, net profit declined 21.1% to Rs. 37 crore due to additional taxes and a loan write-off. The company maintained a strong order backlog of Rs. 932 crore. While growth outlook remains positive, the analyst maintains a neutral rating given the recent run-up in stock price and expects the stock to trade around 10-12 times estimated earnings.
HUL reported disappointing 1QFY2011 results, with profits declining 4% due to a 34% rise in advertising spending. While revenue grew 7% driven by 11% volume growth, operating margins contracted significantly by 289 basis points. Higher competitive intensity in categories like detergents and soaps drove the increase in advertising. Weak profit growth and uncertain earnings outlook despite modest revenue growth lead us to maintain a reduce rating on the stock.
Graphite India reported a 66% year-over-year increase in 4QFY2010 sales, in line with estimates. Full year FY2010 sales fell 10.1%, lower than expected, due to lower production at the company's German facility. However, operating margins increased to a strong 29.4% for FY2010 due to higher realizations. Going forward, the company is well positioned for growth due to increasing demand from the steel industry and its capacity expansion plans. The report maintains a "Buy" recommendation on the stock based on its attractive valuation and growth outlook.
Subros reported a 15.8% jump in net sales to Rs249cr for the fourth quarter of fiscal year 2010, which was in line with expectations. Volume growth of 48.5% and realization growth of 14.2% drove the top-line growth. Net profit spiked to Rs9cr from Rs0.8cr in the prior year quarter due to robust volumes and lower raw material costs. EBITDA margins expanded substantially by 336 basis points year-over-year to 10.5% due to a 724 basis point decline in raw material costs as a percentage of sales. The company is expected to maintain its leadership position in the domestic car air conditioning market.
Dabur reported a mixed set of results for the first quarter of fiscal year 2011. While revenue growth was strong at 23% due to a record 20% increase in volume, earnings growth disappointed at 17% due to margin contraction and higher taxes. Revenue was boosted by double-digit growth in consumer care division categories like oral care, health supplements, and home care. However, earnings fell short of estimates due to a rise in advertising spending squeezing margins. The company also announced an acquisition and a bonus share issue.
CESC reported a 2.1% year-over-year growth in net sales to Rs770cr in the fourth quarter of fiscal year 2010, aided by a 1.7% increase in sales volume. The company's operating profit margin improved by 409 basis points to 26% during the quarter, helping net profit rise by 6.4% to Rs100cr. For the full fiscal year 2010, CESC's top-line grew by 8% to Rs3,351cr while bottom-line increased 5.6% to Rs433cr. The analyst maintained a "Buy" recommendation on the stock based on its fiscal year 2012 estimated price-to-earnings ratio of 7.4x and price-to-
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.
Balaji Telefilms posted disappointing quarterly results, with its top-line declining 32% year-over-year and 14% quarter-over-quarter due to a decrease in total programming hours as three shows went off air. While average programming rates increased sequentially, the company reported an operating loss for the quarter. Going forward, the company expects financial performance to remain under pressure due to low visibility in its programming slate and reduced programming hours.
Godrej Consumer Products reported strong revenue growth of 48.1% for the fourth quarter, driven primarily by the consolidation of Godrej Sara Lee. However, excluding this contribution, domestic growth was a disappointing 5.3%. Earnings growth of 54.6% was boosted by margin expansion but adjusted earnings grew only 16% excluding Godrej Sara Lee. While international operations grew robustly, growth in the core domestic business of soaps and hair colors slowed. The brokerage maintains an 'Accumulate' rating based on Godrej's wider portfolio and potential for acquisitions but expects growth to moderate going forward.
Marico reported disappointing quarterly results, with top-line growth of only 6% year-over-year and flat earnings growth, below estimates. However, a significant gross margin expansion of 644 basis points year-over-year was a positive surprise. While underlying volume growth remained strong at 14%, top-line growth was constrained by price cuts. The outlook remains neutral given concerns around value growth and slowing growth at Kaya.
1) Colgate reported a 13.4% year-over-year growth in top-line to Rs. 516 crores, in line with estimates. Volume growth was steady at 11%.
2) Earnings grew 39.6% year-over-year to Rs. 114.4 crores, significantly beating estimates. This was driven by a 638 basis point expansion in operating margins to 24.1% due to higher gross margins.
3) The analyst maintains an 'Accumulate' rating and revised target price of Rs. 752, expecting the company to report a 15.1% CAGR in revenue through FY2012, while margins remain stable.
PVR is expected to see strong performance in its exhibition business in the second and third quarters of FY2011, aided by a robust movie pipeline (both domestic and Hollywood films) and substantial screen additions over the last six months. Management expects 14-15 new 3D English movies to be released over the next 18-24 months. Additionally, PVR is looking to unlock value by selling and leasing back its Phoenix Mill property, which could generate around Rs. 80-100 crore in cash. PVR Pictures is also expected to see multi-fold revenue growth in FY2011 with more film productions lined up. Blu-O, PVR's bowling business, aims to have 150 lanes by FY2012 and
TCS reported strong financial results for the 1QFY2011 quarter that exceeded analyst estimates. Revenue grew 6.2% quarter-over-quarter to Rs. 8,217 crore, driven by an 8.1% increase in business volumes. Operating margins declined slightly due to wage increases and currency fluctuations impacting costs. Net profit declined 5.3% due to higher foreign exchange losses and taxes. The analyst maintains a positive outlook due to TCS's strong deal pipeline and hiring growth, but notes concerns around the European economic situation and currency movements. The stock is recommended as an "Accumulate" with a target price of Rs. 920.
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.
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.
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.
Hotel Leela Venture reported a 24.9% year-over-year growth in net sales to Rs105.8 crore for the first quarter of FY2011, driven by higher occupancy rates and average room rates. Operating profit was up 67.5% to Rs31.6 crore due to fixed cost absorption, leading to a significant increase in net profit to Rs9.2 crore from Rs0.4 crore in the prior-year period. Going forward, the company expects to benefit from improving industry dynamics, but its current valuation remains higher than peers.
BGR Energy Systems reported a very strong 4QFY2010 performance, with revenues growing 130.7% and net profit up 130.6% over the previous year. For the full year, revenues grew 59.7% and net profit increased 74.7%. The company maintained a healthy order backlog of Rs10,230cr and expects continued growth in orders. The analyst maintains a Buy recommendation on the stock with a target price of Rs722, noting attractive valuation multiples and expecting revenue and profit to grow at 36.7% and 31.2% CAGR over the next few years.
HDIL reported marginally higher than expected 4QFY2010 results. Revenue was driven by TDR sales of 1.48 million square feet from its Mumbai International Airport project. The company has pre-sold 75% of residential projects launched since FY2009, providing Rs2,600 crore in revenue visibility over FY2010-12. The company plans to launch another 5-6 million square feet in FY2011. While execution of the MIAL project and new launches provide growth visibility, delays in relocating families for the MIAL project phase 1 and recent management changes have hurt the stock price. The analyst maintains a Buy rating with a target price of Rs302 per share.
The document provides a weekly market review covering the period of May 28 - June 4, 2010. It summarizes that the Indian stock market extended its gains during the week, with both major indices ending higher, despite volatility in sessions. Most sectoral indices ended higher, with the exception of metals and realty. Within autos, Maruti and M&M outperformed on strong sales, helping the auto index gain the most. The review also covers FII/FPI flows, mutual fund activity, global market performance and initiates coverage on United Phosphorus with a buy rating.
The document summarizes market performance and news from India for May 31, 2010. Key points:
- Indian indices rebounded from recent lows but pared gains, with the Sensex and Nifty closing up 1.2% and 1.3% respectively.
- News highlights include RIL making a fifth oil discovery, an open offer for Areva T&D India, and result reviews for several companies.
- The outlook provides support and resistance levels for the indices and reviews several companies' quarterly results.
Tata Motors, Maruti Suzuki, and Mahindra & Mahindra all reported double-digit sales growth in September 2010, driven by strong festive season demand. Tata Motors' CV segment grew 18% while its PV segment grew 32.4%. Maruti Suzuki saw total sales increase 29.6% and domestic sales rise 32.9%. Mahindra & Mahindra's overall sales grew 15.9% with automotive sales up 23.7%. Bajaj Auto continued to lead the two-wheeler segment with 25.6% sales growth.
The document provides an outlook on the Indian stock market for September 6, 2010. It summarizes the performance of key indices, noting that the Sensex and Nifty closed lower by 0.1% each while mid and small cap indices gained 1%. Selected stocks that gained or lost 1-2% are also mentioned. The document then provides analysis on specific companies like Lakshmi Machine Works, Anant Raj Industries, Lupin, and PVR and initiates or maintains buy recommendations. Key domestic, global indices and sector performances are also summarized along with net FII inflows.
Asian Paints reported strong quarterly results with 16% year-over-year revenue growth, beating estimates. Earnings grew 76% year-over-year due to expanded gross margins and improved profitability internationally. The analyst upgrades the stock to "Accumulate" expecting continued revenue growth of 13-14% from market share gains and product mix improvements, as well as sustained earnings momentum. The stock price provides an attractive entry point given its growth potential.
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.
Punj Lloyd reported disappointing results for the fourth quarter of fiscal year 2010, with top-line declining 45% and losses on the Simon Carves front negatively impacting profits. Interest and depreciation costs were as expected. Extraordinary gains from selling a stake in Pipavav Shipyard lessened the loss. Slower expected execution has led analysts to trim revenue and profit estimates, while factoring in additional extraordinary losses. However, the company maintains a buy rating due to its scale, diversified order backlog, and relatively low valuation.
The market indices closed near their daily highs, with the Nifty up 1.22% and Sensex up 1.14%. The top gainers were RCOM (+4.65%), RELINFRA (+4.47%), and TATAPOWER (+3.75%), while the top losers were GAIL (-2.52%), ITC (-1.36%), and ABB (-1.30%). Most sectors closed in positive territory, led by the consumer discretionary sector (+2.83%). The technical analysis indicates the markets may test higher resistance levels of 17920-18040/5370-5400 if gains continue above 17800/5340 support levels.
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.
The key points from the document are:
1) Indian stock markets continued their upward trend during Mahurat Trading, with the BSE Sensex crossing 21,000 points and sectoral gains across auto and pharma.
2) The markets are expected to continue rising in the near term if indexes remain above support levels in early trading.
3) Orchid Chemicals redeemed outstanding foreign currency convertible bonds of $25.7 million on their due date using cash from a recent acquisition.
GIPCL posted a 23.1% year-over-year increase in net profit to Rs36cr for the fourth quarter of fiscal year 2010, in line with estimates. The growth was aided by a 15.5% decline in fuel costs due to increased gas availability and lower interest and tax expenses. While net sales declined 12.4% to Rs254cr, operating profit fell 13.3% to Rs62cr. The company maintained its expansion plans and guidance. At a share price of Rs110, GIPCL is trading at an attractive valuation compared to its peers.
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.
Dabur reported a 16% year-over-year growth in top-line revenue for the fourth quarter of FY2010, below estimates. Earnings grew 30% year-over-year, above estimates, driven by higher gross margins and lower expenses. While top-line growth was lower than expected, strong operating performance from margin expansion led to earnings beating estimates. Going forward, the company expects input costs to remain low, though it maintains a neutral outlook on the stock given its recent run-up in price.
Reliance Industries reported lower-than-expected quarterly results, with profits impacted by lower-than-expected refining margins. Revenue grew 120.7% year-over-year primarily due to higher refining revenues, but margins were lower than estimates. While volume growth was strong, profitability was hurt by refining margins of $7.5/bbl compared to an estimated $8.5/bbl. The analyst maintains a buy rating due to expectations for margin improvement and inorganic growth opportunities.
Bharat Forge (BFL) reported a 92.8% year-over-year growth in standalone net sales for the fourth quarter of fiscal year 2010, exceeding expectations. Operating margins improved substantially to 22.8% due to lower raw material costs and operating leverage. BFL recorded a net profit of Rs. 61.3 crore for the quarter, above estimates. At the consolidated level, BFL reported a 46.7% year-over-year increase in revenues for the fourth quarter and completed the process of restructuring its global subsidiaries.
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.
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.
1) HCC reported a 13.6% increase in net sales to Rs.995.4 crore for 1QFY2011, in line with Angel Research estimates. Operating profit grew 9.3% to Rs.125.8 crore.
2) Net profit increased 55.6% to Rs.28.3 crore, marginally ahead of estimates due to higher operating margins and lower taxes.
3) Angel Research maintains a Neutral view on HCC, valuing it at Rs.126/share on an SOTP basis, with limited upside from current levels given its valuation of 36.5x FY2012 EPS.
1) Nestle reported a 16.9% increase in top-line to Rs1,480cr, slightly below estimates, due to higher volumes and limited price increases. Bottom-line grew only 2.3%, significantly below expectations, due to a spike in input costs.
2) Gross margins contracted 263bps and EBITDA margins fell 397bps as input costs rose substantially. Higher brand investments and other expenses also weighed on profits.
3) The analyst downgrades Nestle to Neutral and lowers earnings estimates due to higher input costs and competitive pressures. Valuations leave little upside potential given cost pressures.
For the fourth quarter of 2010, TVS Motor reported net sales of Rs. 1,216 crore, up 33.7% year-over-year due to a 27.8% increase in volumes and 8.7% increase in realizations. Operating margins expanded 118 basis points due to a 416 basis point drop in raw material costs. Net profit was Rs. 20.3 crore, up 38.9% year-over-year. Going forward, TVS Motor expects to improve market share following new product launches but faces competitive pressures. The analyst maintains a neutral rating due to recent stock price appreciation and TVS Motor's inconsistent performance history.
Reliance Communication's quarterly performance failed to meet expectations, with wireless revenue growing only 1.7% compared to the industry average. While the company surpassed 100 million subscribers, its broadband and global business segments saw declines. Profits grew 10.1% due to higher interest earned, but margins fell due to higher network and access costs. Going forward, profitability is expected to come under pressure from increased leverage for capex spending and acquiring 3G licenses.
SpiceJet reported a 34.3% year-over-year increase in net sales for the fourth quarter of FY2010, but net sales were 12.8% lower than the previous quarter and slightly below estimates. Net profit was Rs. 27.5 crore compared to a loss in the previous year, but below estimates due to lower revenues and higher advertising costs. The analyst believes SpiceJet is well positioned to benefit from growing passenger demand and has plans to add four more aircraft in FY2011. The stock is recommended as an accumulate with a revised target price of Rs. 65, which would be a 10% upside from current levels.
- Greenply Industries reported a 54.6% year-over-year increase in standalone quarterly revenue to Rs259 crore, exceeding estimates, driven by higher capacity utilization and realizations in plywood and laminates.
- Net profit increased 54.7% to Rs13.3 crore, also ahead of estimates, due to lower interest and depreciation expenses.
- The report maintains a buy recommendation, as the company is well-positioned to benefit from capacity expansions in laminates and a new MDF plant, while its stock trades at a discount to earnings estimates.
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.
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.
Colgate Palmolive reported first quarter results for fiscal year 2011 with revenues growing 13% year-over-year to Rs. 528.8 crores, slightly below estimates. Earnings beat estimates due to a sharp rise in gross margins of 662 basis points year-over-year. Volume growth was 13% overall led by 14% growth in toothpaste and 19% growth in toothbrushes. The analyst maintains a "Reduce" rating due to the stock being highly expensive trading at 23.4 times estimated fiscal year 2012 earnings per share given muted earnings growth estimates.
The document provides an analysis of Consolidated Construction Consortium's (CCCL) 4QFY2010 results and outlook. Some key points:
- CCCL reported 33.2% revenue growth for 4QFY2010 inline with estimates, but order inflow for FY2010 was below expectations at Rs2,166cr.
- The company's current order book stands at Rs3,392cr, providing 1.4x revenue visibility for FY2011, which is lower than peers.
- The analyst expects 19.2% revenue CAGR for CCCL over FY2010-2012 on the back of its order book and recovery in private capex.
- C
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.
Pratibha ind Result Update 4 qfy2010-110510Angel Broking
Pratibha Industries reported financial results for the fourth quarter of fiscal year 2010 that were in line with expectations. Operating margins improved significantly due to a reduction in raw material costs, boosting the bottom line. However, the company paid taxes at the marginal rate rather than claiming tax benefits. While the results were decent, the analyst maintains a neutral outlook on the stock given that positives are already reflected in the price.
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.
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.
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.
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%.
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.
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
1. 3QFY2010 Result Update I Retail
April 26, 2010
Pantaloon Retail ACCUMULATE
CMP Rs423
Performance Highlights Target Price Rs469
For 3QFY2010, Pantaloon Retail (PRIL), on a standalone basis, reported a Investment Period 15Months
25.3% yoy growth in net sales to Rs2,057.6cr. The growth was below our
expectation of 30.2% during the quarter. The growth in the top-line was Stock Info
facilitated mainly due to Same Store Sales (SSS) growth yoy in Value and Sector Retail
Lifestyle Retailing, of 13.9% and 13.2%, respectively. The EBITDA margin
remained more or less unchanged at 10.5% yoy. On the net profit front, PRIL Market Cap (Rs cr) 8,719
reported a growth of 62.7% to Rs55.9cr, led by a decent top-line performance
Beta 1.0
and unchanged interest cost (on a yoy basis). Going ahead, we expect the
company to continue witnessing good growth, on the back of retail space 52 WK High / Low 455 / 176
expansion, a revival in consumer sentiment, back-end efficiencies and
Avg. Daily Volume 302,112
organisational restructuring. We recommend an Accumulate rating on the
stock. Face Value (Rs) 2
BSE Sensex 17,745
Retail space expansion on track: In 3QFY2010, PRIL added ~0.5mn sq ft
of retail space, thereby taking the total addition during 9MFY2010 to ~1.3mn Nifty 5,322
sq ft. We believe that the retail space expansion is on track, considering the
company’s plan to add ~2mn sq ft every year. The retail space expansion is Reuters Code PART.BO
skewed towards the value retailing format, accounting for around ~ 65% of Bloomberg Code PF@IN
the retail space addition during 3QFY2010. We believe that the improved
consumer sentiment, coupled with retail space addition, would bode well for Shareholding Pattern (%)
PRIL, going ahead.
Promoters 44.7
Outlook and Valuation: PRIL's presence across price points and categories MF/Banks/Indian FIs 22.9
helps the company to be in a better position than its peers. Apart from
FII/NRIs/OCBs 25.9
positives like on-track retail space expansion and a revival in consumer
sentiment, we believe that the company's restructuring initiative would enable it Indian Public 6.5
to enhance its focus on different segments and would also provide it with a
good opportunity of value unlocking. At Rs423, the stock is trading at 20.8x its Abs. (%) 3m 1yr 3yr
FY2012E Earnings and at 2.4x its FY2012E P/BV. Our SOTP Target for PRIL is Sensex 5.7 56.6 24.7
Rs469, wherein we have valued its stake in FCH, HSRIL and Future Generali at
Rs31, Rs12 and Rs18, respectively. Considering our fair value of Rs469 for the PRIL 62.5 110.1 10.6
stock, we recommend an Accumulate rating on the stock.
Key Financials (Standalone)
Y/E June (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 6,342 8,254 10,704 13,137
% chg 25.6 30.2 29.7 22.7
Net Profit 143.8 221.9 320.6 419.6
% chg 14.2 54.3 44.5 30.9
EBITDA Margin (%) 10.5 10.3 10.1 10.1
EPS (Rs) 7.6 10.8 15.6 20.4
P/E (x) 55.9 39.3 27.2 20.8
P/BV (x) 3.5 3.0 2.7 2.4
RoE (%) 7.0 8.6 10.4 12.2
RoCE (%) 11.3 11.8 13.2 14.7
Viraj Nadkarni
EV / Sales (x) 1.8 1.5 1.2 0.9
Tel: 022 – 4040 3800 Ext: 309
EV/EBITDA 17.4 14.1 11.5 9.6
E-mail: virajm.nadkarni@angeltrade.com
Source: Company, Angel Research
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539
2. Pantaloon Retail I 3QFY2010 Result Update
Exhibit 1: 3QFY2010 Performance
Y/E June (Rs cr) 3QFY2010 3QFY2009 % chg 9MFY2010 9MFY2009 % chg
Net Sales 2,058 1,642 25.3 5,748 4,679 22.8
Consumption of RM 1,459 1,150 26.9 4,033 3,278 23.0
(% of sales) 70.90 70.03 70.2 70.1
Staff Costs 84.2 69.5 21.2 238.66 204.23 16.9
(% to sales) 4.09 4.23 4.2 4.4
Other expenses 299.0 249.6 19.8 866.37 711.43 21.8
(% to sales) 14.53 15.20 15.1 15.2
Total Expenditure 1,842 1,469 25.4 5,138 4,194 22.5
Operating Profit 215.6 173.0 24.6 609 485 25.5
OPM 10.48 10.54 10.6 10.4
Interest 85.9 84.7 1.3 256.24 227.27 12.7
Depreciation 46.5 36.9 26.0 134.91 101.23 33.3
Other Income 1.4 1.6 (9.4) 8.18 4.27 91.6
PBT (excl. Extr. Items) 84.7 53.0 59.8 226.2 161.0 40.5
Extr. Income/(Expense) - - - -
PBT (incl. Extr. Items) 84.7 53.0 59.8 226.2 161.0 40.5
(% of Sales) 4.1 3.2 3.9 3.4
Provision for Taxation 28.80 18.64 54.5 75.78 56.88 33.2
(% of PBT) 34.0 35.2 33.5 35.3
Reported PAT 55.92 34.37 62.7 150.41 104.09 44.5
PATM 2.72 2.09 2.6 2.2
Equity shares (cr) 20.6 17.5 20.6 17.5
EPS (Rs) 2.71 1.96 38.3 7.30 5.94 22.8
Net Sales 2,058 1,642 25.3 5,748 4,679 22.8
Consumption of RM 1,459 1,150 26.9 4,033 3,278 23.0
Source: Company, Angel Research
Key Highlights
Net Sales surge by 25.3%: Pantaloon Retail (PRIL), on a standalone basis, reported a
25.3% yoy growth in net sales to Rs2, 057.6cr. Higher SSS growth of 13.9% and 13.2%,
for value and lifestyle retailing, respectively, during 3QFY2010 (7% and 11%,
respectively, during 2QFY2010) enabled the company to post decent top-line growth.
Moreover, the Home Retailing format registered a stellar growth of 18.6%yoy (1% growth
in 2QFY2010). PRIL posted a total sales growth of 31%, 38.4% and 22.4% yoy,
respectively, for value retailing, lifestyle retailing and home retailing during the quarter.
Growth in the lifestyle retailing and Home retailing formats are encouraging signs, as
they clearly indicate that consumers are opening their wallets for discretionary spending.
We believe that a continuation of this trend would bode well for PRIL, thereby enabling it
to maintain its top-line growth, going ahead.
April 26, 2010 2
3. Pantaloon Retail I 3QFY2010 Result Update
Exhibit 2: Net Sales Growth Trend
2,400
2,100 12
1,800
9
1,500
1,200
(Rs cr)
6
(%)
900
600 3
300
0 0
2QFY2008
3QFY2008
4QFY2008
1QFY2009
2QFY2009
3QFY2009
4QFY2009
1QFY2010
2QFY2010
3QFY2010
Net Sales Growth (%)
Source: Company, Angel Research
Operating Margins remain flat: During the quarter, PRIL’s Operating profit
witnessed a 24.6% yoy growth to Rs215.6cr. The EBITDA margin stayed flat at
10.5% (on a yoy basis), which was slightly lower than our expectation. In percentage
to sales terms, the increase in the raw material cost of ~90bp was offset by a
decline in the staff costs and other overheads, thereby enabling the company to
maintain its margins.
Exhibit 3: EBITDA and Operating Margins
240
200 11.0 12
10.2 10.2 10.3 10.5 10.7 10.6 10.5
160 8.9
8.4
(Rs cr)
8
120
(%)
80
4
40
0 0
2QFY2008
3QFY2008
4QFY2008
1QFY2009
2QFY2009
3QFY2009
4QFY2009
1QFY2010
2QFY2010
3QFY2010
EBITDA EBITDA Margin
Source: Company, Angel Research
Bottom-line surges by 62.7%: PRIL’s bottom-line surged by 62.7% yoy to Rs55.9cr
(Rs34.4cr) during 3QFY2010. The interest cost has remained flat, with a marginal
1.3% rise on a yoy basis, mainly enabling the growth posted at the operating level to
trickle down further to the bottom-line. The Net Profit margin surged up by 60bp yoy
to 2.7% in 3QFY2010.
April 26, 2010 3
4. Pantaloon Retail I 3QFY2010 Result Update
Exhibit 4: Net Profit Trend and Net Profit Margins
60 4
50
2.6 2.6 2.7 3
2.4 2.4 2.4 2.5
40 2.2 2.2
2.1
(Rs cr)
(%)
30 2
20
1
10
0 0
2QFY2008
3QFY2008
4QFY2008
1QFY2009
2QFY2009
3QFY2009
4QFY2009
1QFY2010
2QFY2010
3QFY2010
Adjusted Profit After Extra-ordinary item Net Margin
Source: Company, Angel Research
Restructuring on track: PRIL is in the process of restructuring its entire business into
retail and non-retail ventures. It is dividing its businesses into three parts, namely,
retail, financial services and other support businesses. PRIL has transferred the value
business to its wholly-owned subsidiary, Future Value Retail Limited (FVRL). PRIL has
reported results for 3QFY2010 excluding FVRL (the erstwhile value retail segment of
PRIL, now a wholly-owned subsidiary). However, the company has also provided
results including the performance of FVRL for comparative purposes.
Outlook and Valuation
PRIL's presence across price points and categories helps the company to be in a
better position than its peers. Apart from positives like on-track retail space
expansion and a revival in consumer sentiment, we believe that the company's
restructuring initiative would enable it to enhance its focus on different segments and
would also provide it with a good opportunity of value unlocking. We estimate the
company to clock around a 27.5% and 42.4% CAGR in its revenues and bottom-
line, respectively, over FY2009-12E. At Rs423, the stock is trading at 20.8x its
FY2012E Earnings and at 2.4x FY2012E P/BV. Our SOTP Target for PRIL is Rs469
on FY2012E valuations, wherein we have valued its stake in FCH, HSRIL and Future
Generali at Rs31, Rs12 and Rs18, respectively. PRIL continues to be our Top Pick in
the Retail Sector. Considering its fair value of Rs469, we recommend an Accumulate
rating on the stock.
Exhibit 5: 1 year forward PE band
900
50x
800
700
600 35x
500
400 22x
300
200
10x
100
0
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Apr-04
Apr-05
Apr-06
Apr-07
Apr-08
Apr-09
Apr-10
Source: Company, Angel Research
April 26, 2010 4
8. Pantaloon Retail I 3QFY2010 Result Update
Research Team Tel: 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this
document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to
arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved),
and should consult their own advisors to determine the merits and risks of such an investment.
Angel Securities Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are
inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company
may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as
opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true,
and is for general guidance only. Angel Securities Limited has not independently verified all the information contained within this document. Accordingly, we
cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel
Securities Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other
reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on,
directly or indirectly.
Angel Securities Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services
in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past.
Neither Angel Securities Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the
use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section).
Disclosure of Interest Statement Pantaloon Retail
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
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 and its Group companies.
Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.
Tel : (022) 3952 4568 / 4040 3800
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE:
INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM /
CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
April 26, 2010 8