Tech Mahindra reported better-than-expected 4QFY2010 results, with revenue growth of -0.3% quarter-over-quarter. Revenue growth in constant currency was 4% supported by strong volume growth from their top account BT. EBITDA margins remained flat at 23.6% despite rupee appreciation and profit after tax grew 31.3% due to lower interest costs and foreign exchange gains. The analyst maintains a Buy recommendation based on expected revenue and profit growth over the next two years.
Tech Mahindra's recent deal restructuring with BT ends uncertainty and guarantees volumes. While margins are currently weak due to the BT deal and Satyam uncertainty, margins are expected to eventually recover to peer levels as the company has a pedigree as a tier-1 player. The stock currently looks attractive relative to peers on an EV/Sales basis, trading at a substantial discount to peer averages. Based on this, the report upgrades Tech Mahindra to a "Buy" recommendation with a target price of Rs1,168 per share.
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.
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.
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.
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.
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.
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.
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.
Tech Mahindra's recent deal restructuring with BT ends uncertainty and guarantees volumes. While margins are currently weak due to the BT deal and Satyam uncertainty, margins are expected to eventually recover to peer levels as the company has a pedigree as a tier-1 player. The stock currently looks attractive relative to peers on an EV/Sales basis, trading at a substantial discount to peer averages. Based on this, the report upgrades Tech Mahindra to a "Buy" recommendation with a target price of Rs1,168 per share.
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.
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.
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.
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.
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.
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.
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.
3i Infotech reported subdued quarterly results with a 1.4% increase in revenue. EBITDA margins declined slightly despite a 10% wage hike. The bottom line declined from the previous quarter due to higher costs and taxes, though it improved year-over-year. The company maintained its full-year revenue guidance, expecting growth of 11-14% driven by a strong order backlog. While initiatives to boost integrated offerings are expected to drive long-term growth, margins may be pressured in the near-term from operational investments. The report maintains a Buy recommendation based on a revised target price implying a 6x forward P/E multiple.
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.
1) Indian Bank reported an 11% increase in net profit for 1QFY2011 compared to the previous year, which was above estimates. However, gross NPAs sharply increased.
2) Advances and deposits grew by 31% and 19% respectively year-over-year. Net interest income declined slightly sequentially despite higher interest payments on savings deposits.
3) Going forward, the bank's net interest margins may decline in a rising interest rate environment given its moderate CASA ratio of 33%, and asset quality will need to be monitored in the next two quarters.
Bharti Airtel reported a 2.4% year-over-year growth in net revenue for 4QFY2010 due to strong growth in its tower business and other businesses, although its mobile business revenue declined slightly. While the company's mobile subscriber base grew 35.9% year-over-year, revenue per user declined significantly due to competitive pressures. Higher selling, general and administrative expenses eroded operating margins, and combined with higher taxes and depreciation expenses, net income declined 8.2% year-over-year despite total minutes of usage growing by 12.8%. Going forward, the company expects continued strong subscriber addition but declining revenue per minute, which will impact profitability.
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.
Infosys reported strong financial results for the fourth quarter of fiscal year 2010 that exceeded guidance and analyst estimates. Revenue grew 3.5% sequentially in rupees and 5.2% in US dollars, above the company's guidance range. Earnings before interest, taxes, depreciation and amortization margins contracted due to increased hiring and expenses, resulting in lower net profit growth of 2.2%. For fiscal year 2011, Infosys provided guidance for 15.9-18% revenue growth and 8.7-4.3% earnings per share growth in US dollars, but more muted 9-11% revenue growth and -2.6-1.4% earnings per share growth in rupees due
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.
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.
Infotech Enterprises reported modest revenue growth of 2% for the fourth quarter of fiscal year 2010. Net profit increased 35% due to a 130% rise in other income and lower taxes. While revenue from the engineering and manufacturing segment grew 6%, the utilities, telecom, and government segment declined 6%. Looking forward, the company expects strong revenue growth driven by its order pipeline and improving business environment. The analyst maintains a 'Buy' rating with a target price implying 20% upside.
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.
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.
Indian Overseas Bank reported a net profit decline of 33.6% year-over-year but a rise of 57.2% quarter-over-quarter to Rs200cr for 1QFY2011, above estimates. While advances grew 7.9% year-over-year, deposits increased 8.6% year-over-year. Asset quality pressures eased with gross and net NPA ratios improving, and provisions declining sharply. However, non-interest income declined due to muted loan growth and treasury gains. Operating expenses rose 15.2% year-over-year.
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.
Axis Bank has announced its 1QFY2011 results. Net profit grew 32.0% to Rs742cr, better than estimates due to higher than expected net interest income. Advances grew robustly by 39.1% year-over-year driven by corporate lending. Deposits also increased strongly by 33.8% year-over-year. While net interest margins declined, operating performance was strong with stable asset quality. The analyst maintains an 'Accumulate' rating and target price of Rs1,477, implying 10% upside.
1) Marico reported a 13.4% increase in quarterly revenue to Rs. 790.1 crore, above estimates, led by 16% volume growth in its core brands Parachute and Saffola.
2) Earnings grew 27% to Rs. 73.7 crore after adjusting for tax rate declines, despite margins contracting.
3) The analyst upgrades Marico stock from "Reduce" to "Neutral" and increases earnings estimates by 2-3% based on strong volume growth and lower taxes boosting profits.
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.
TCS reported strong financial results for the fourth quarter of fiscal year 2010 that exceeded expectations. Revenue grew 1.1% over the previous quarter to Rs. 7,737 crore, driven by a 4% increase in volumes. However, currency fluctuations reduced realized revenue. Improved operating levers helped expand operating margins by 19 basis points sequentially and 368 basis points year-over-year. Strong other income and profit growth of 7.4% sequentially and 47.1% year-over-year exceeded forecasts. The company added over 10,000 employees in the quarter and closed 10 large deals.
Yes Bank reported strong loan and deposit growth in 4QFY2010, with loans up 18.6% sequentially and deposits up 21.6%. This fueled a 15.8% sequential rise in net interest income. However, the analyst maintains a neutral outlook due to expensive valuation multiples that require high execution of growth plans, especially in retail banking.
Titan Industries reported strong performance in the first quarter of fiscal year 2011 that was above expectations. Revenue grew 41.9% year-over-year driven by robust growth in the jewelry and watches segments. Operating and net profits increased 40.2% and 76.5% respectively. The company's jewelry segment saw a 49.6% revenue increase and 30% volume growth. The watches segment grew revenues 21.8% with improved sales of higher margin watches. While remaining positive on growth prospects, the analyst maintains a Neutral rating due to expensive valuations.
Infosys reported a 4.3% quarter-over-quarter growth in revenues to Rs. 6,198 crore for the first quarter of fiscal year 2011, backed by a 7.6% growth in volumes. However, earnings before interest and taxes (EBIT) margins fell by 1.8% due to annual wage hikes. Infosys revised its fiscal year 2011 revenue growth guidance upwards from 16-18% to 19-21% in rupee terms and maintained its earnings per share growth guidance of 7.2-11.5%. The growth was broad-based across services and verticals led by the banking, financial services and insurance sector.
This document summarizes NTPC's financial results for the second quarter of FY2011. Key highlights include:
- Net sales grew 20.5% year-over-year to Rs. 13,350 crore, driven by higher power generation and realizations.
- Operating profit declined 8.5% to Rs. 3,371 crore due to higher fuel costs and other expenses.
- Reported net profit fell 2% to Rs. 2,107 crore due to higher provisions, but benefited from extraordinary income related to prior periods.
- The analyst maintains an "Accumulate" rating with a target price of Rs. 230, seeing continued growth from capacity additions but some pressure on margins.
Sterlite Industries reported flat net sales growth of 0.9% year-over-year for the second quarter of fiscal year 2011, as higher zinc-lead sales and increased metal prices were offset by lower copper production and lower power tariffs. Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 11.5% due to a 272 basis point expansion in EBITDA margins to 24.4% from higher London Metal Exchange prices, despite rising input costs. However, net profit grew only 5.1% due to losses reported by Vedanta Aluminium. Sterlite Industries is currently trading at attractive valuations and is well positioned to benefit from its expansion plans
3i Infotech reported subdued quarterly results with a 1.4% increase in revenue. EBITDA margins declined slightly despite a 10% wage hike. The bottom line declined from the previous quarter due to higher costs and taxes, though it improved year-over-year. The company maintained its full-year revenue guidance, expecting growth of 11-14% driven by a strong order backlog. While initiatives to boost integrated offerings are expected to drive long-term growth, margins may be pressured in the near-term from operational investments. The report maintains a Buy recommendation based on a revised target price implying a 6x forward P/E multiple.
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.
1) Indian Bank reported an 11% increase in net profit for 1QFY2011 compared to the previous year, which was above estimates. However, gross NPAs sharply increased.
2) Advances and deposits grew by 31% and 19% respectively year-over-year. Net interest income declined slightly sequentially despite higher interest payments on savings deposits.
3) Going forward, the bank's net interest margins may decline in a rising interest rate environment given its moderate CASA ratio of 33%, and asset quality will need to be monitored in the next two quarters.
Bharti Airtel reported a 2.4% year-over-year growth in net revenue for 4QFY2010 due to strong growth in its tower business and other businesses, although its mobile business revenue declined slightly. While the company's mobile subscriber base grew 35.9% year-over-year, revenue per user declined significantly due to competitive pressures. Higher selling, general and administrative expenses eroded operating margins, and combined with higher taxes and depreciation expenses, net income declined 8.2% year-over-year despite total minutes of usage growing by 12.8%. Going forward, the company expects continued strong subscriber addition but declining revenue per minute, which will impact profitability.
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.
Infosys reported strong financial results for the fourth quarter of fiscal year 2010 that exceeded guidance and analyst estimates. Revenue grew 3.5% sequentially in rupees and 5.2% in US dollars, above the company's guidance range. Earnings before interest, taxes, depreciation and amortization margins contracted due to increased hiring and expenses, resulting in lower net profit growth of 2.2%. For fiscal year 2011, Infosys provided guidance for 15.9-18% revenue growth and 8.7-4.3% earnings per share growth in US dollars, but more muted 9-11% revenue growth and -2.6-1.4% earnings per share growth in rupees due
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.
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.
Infotech Enterprises reported modest revenue growth of 2% for the fourth quarter of fiscal year 2010. Net profit increased 35% due to a 130% rise in other income and lower taxes. While revenue from the engineering and manufacturing segment grew 6%, the utilities, telecom, and government segment declined 6%. Looking forward, the company expects strong revenue growth driven by its order pipeline and improving business environment. The analyst maintains a 'Buy' rating with a target price implying 20% upside.
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.
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.
Indian Overseas Bank reported a net profit decline of 33.6% year-over-year but a rise of 57.2% quarter-over-quarter to Rs200cr for 1QFY2011, above estimates. While advances grew 7.9% year-over-year, deposits increased 8.6% year-over-year. Asset quality pressures eased with gross and net NPA ratios improving, and provisions declining sharply. However, non-interest income declined due to muted loan growth and treasury gains. Operating expenses rose 15.2% year-over-year.
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.
Axis Bank has announced its 1QFY2011 results. Net profit grew 32.0% to Rs742cr, better than estimates due to higher than expected net interest income. Advances grew robustly by 39.1% year-over-year driven by corporate lending. Deposits also increased strongly by 33.8% year-over-year. While net interest margins declined, operating performance was strong with stable asset quality. The analyst maintains an 'Accumulate' rating and target price of Rs1,477, implying 10% upside.
1) Marico reported a 13.4% increase in quarterly revenue to Rs. 790.1 crore, above estimates, led by 16% volume growth in its core brands Parachute and Saffola.
2) Earnings grew 27% to Rs. 73.7 crore after adjusting for tax rate declines, despite margins contracting.
3) The analyst upgrades Marico stock from "Reduce" to "Neutral" and increases earnings estimates by 2-3% based on strong volume growth and lower taxes boosting profits.
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.
TCS reported strong financial results for the fourth quarter of fiscal year 2010 that exceeded expectations. Revenue grew 1.1% over the previous quarter to Rs. 7,737 crore, driven by a 4% increase in volumes. However, currency fluctuations reduced realized revenue. Improved operating levers helped expand operating margins by 19 basis points sequentially and 368 basis points year-over-year. Strong other income and profit growth of 7.4% sequentially and 47.1% year-over-year exceeded forecasts. The company added over 10,000 employees in the quarter and closed 10 large deals.
Yes Bank reported strong loan and deposit growth in 4QFY2010, with loans up 18.6% sequentially and deposits up 21.6%. This fueled a 15.8% sequential rise in net interest income. However, the analyst maintains a neutral outlook due to expensive valuation multiples that require high execution of growth plans, especially in retail banking.
Titan Industries reported strong performance in the first quarter of fiscal year 2011 that was above expectations. Revenue grew 41.9% year-over-year driven by robust growth in the jewelry and watches segments. Operating and net profits increased 40.2% and 76.5% respectively. The company's jewelry segment saw a 49.6% revenue increase and 30% volume growth. The watches segment grew revenues 21.8% with improved sales of higher margin watches. While remaining positive on growth prospects, the analyst maintains a Neutral rating due to expensive valuations.
Infosys reported a 4.3% quarter-over-quarter growth in revenues to Rs. 6,198 crore for the first quarter of fiscal year 2011, backed by a 7.6% growth in volumes. However, earnings before interest and taxes (EBIT) margins fell by 1.8% due to annual wage hikes. Infosys revised its fiscal year 2011 revenue growth guidance upwards from 16-18% to 19-21% in rupee terms and maintained its earnings per share growth guidance of 7.2-11.5%. The growth was broad-based across services and verticals led by the banking, financial services and insurance sector.
This document summarizes NTPC's financial results for the second quarter of FY2011. Key highlights include:
- Net sales grew 20.5% year-over-year to Rs. 13,350 crore, driven by higher power generation and realizations.
- Operating profit declined 8.5% to Rs. 3,371 crore due to higher fuel costs and other expenses.
- Reported net profit fell 2% to Rs. 2,107 crore due to higher provisions, but benefited from extraordinary income related to prior periods.
- The analyst maintains an "Accumulate" rating with a target price of Rs. 230, seeing continued growth from capacity additions but some pressure on margins.
Sterlite Industries reported flat net sales growth of 0.9% year-over-year for the second quarter of fiscal year 2011, as higher zinc-lead sales and increased metal prices were offset by lower copper production and lower power tariffs. Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 11.5% due to a 272 basis point expansion in EBITDA margins to 24.4% from higher London Metal Exchange prices, despite rising input costs. However, net profit grew only 5.1% due to losses reported by Vedanta Aluminium. Sterlite Industries is currently trading at attractive valuations and is well positioned to benefit from its expansion plans
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.
The document provides a summary of derivative market activity in India for April 28, 2010. It notes that open interest for Nifty and Mini Nifty futures increased by 1.35% and 1.67% respectively. The put-call ratio for Nifty increased to 1.38 from 1.33. Rollover rates for Nifty and Mini Nifty futures were 42.15% and 39.91% respectively. Open interest increased the most for CONCOR, MARUTI, POLARIS and UNIPHOS while decreasing the most for SYNDIBANK, YESBANK, INDIANB and DRREDDY.
The market indices opened with gains but were unable to sustain them and closed marginally higher. The daily trend remains downward, so indices could test support levels. Reliance group stocks and power sector stocks saw gains, while banks and real estate stocks declined. Divis Labs and Power Grid were positively biased stocks while PNB and IBREALEST were negatively biased. The document provides a daily market summary including index levels, top gainers and losers, sector performances, stock recommendations and pivot table analysis.
The key points from the document are:
1) Indian stock markets opened higher but closed lower, with the Sensex falling 0.41% and the Nifty falling 0.32%.
2) Certain sectors such as reality, consumer durables, and power saw losses over 1%, while metals fell 0.85%.
3) Technical indicators show that if markets close below key support levels of 19822/5966, it would confirm a lower top formation and weakness, with indices potentially falling to 19772-19700/5932-5900.
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.
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.
Corporation Bank reported a 19.9% rise in net profit to Rs312cr for 4QFY2010, ahead of expectations. Advances grew strongly by 30.3% to Rs63,203cr due to robust deposit growth in 3QFY2010. Asset quality improved with the gross NPA ratio declining to 1% and the provision coverage ratio rising to 70%. While core fee income growth was robust, overall non-interest income declined due to lower treasury gains. Going forward, maintaining the growth rate will be challenging in a rising interest rate environment given the bank's regional operations.
Inox Leisure posted strong revenue growth in the fourth quarter aided by seat additions and a big budget movie lineup. However, higher expenses and film distribution shares led to a decline in operating margins. While profits grew on a recurring basis, margins contracted. The analyst maintains a 'Buy' rating, seeing upside from the Fame India acquisition, but lowers earnings estimates to account for higher interest costs.
State Bank of India reported a 25.1% year-over-year increase in net profit for the first quarter of fiscal year 2011, exceeding analyst estimates. Net interest income grew 45.4% year-over-year due to a rise in low-cost deposits and narrowing of net interest margin. Loan growth was 20.4% year-over-year while deposit growth was 6.8% year-over-year. Non-performing assets rose slightly during the quarter but asset quality remained reasonable with net NPA ratio of 1.7%. The analyst maintains an "Accumulate" rating on the stock.
The document is a derivatives report from India Research dated May 03, 2010. It provides the following key information:
1) The Nifty and Mini Nifty futures open interest decreased by 20.08% and 26.75% respectively due to contract expiry. The market closed at 5278 levels.
2) Certain stocks like ASHOKLEY, BGRENERGY, and ADANIENT saw increases in open interest, while stocks like CROMPGREAV, NAGARCONST, and ZEEL saw decreases in open interest.
3) FIIs were net buyers of Rs. 356 crore in the cash market segment and have formed long positions in stock futures. Global cues are weak and
Educomp reported strong quarterly performance in 4QFY2010, with 47.1% revenue growth and 9.1% profit growth. However, excluding one-time items, revenue fell 3% while profit rose 90%. The company expects 25-30% revenue growth and profit between Rs330-350cr for FY2011. Educomp's school learning solutions drove growth but newer initiatives face investment periods. While margins expanded on cost reductions, profit growth was restricted by higher costs and taxes. The company maintains aggressive expansion plans in K-12, online, and supplementary education segments.
The Indian stock market gained over the week, with the BSE Sensex and NSE Nifty indices ending higher by 2.5% and 2.7% respectively. Most sectoral indices also closed in green, with the BSE Realty index gaining the most at 4.1%. Markets gained in the latter half of the week as world stocks rose on signals of support for the euro zone from China. Mutual funds saw a net purchase of equity worth Rs. 400 crore for the week. Piramal Healthcare sold its domestic formulations business for US$ 3.72 billion, a significant deal in the Indian pharmaceutical industry. The report also provides analysis and recommendations on Bhushan Steel and Jagran P
The weekly market review summarizes activity in the Indian stock market for the week ending April 30, 2010. The key points are:
- The BSE Sensex and NSE Nifty ended the week lower by 0.8% and 0.5% respectively, amid high volatility from F&O rollover.
- The BSE Oil & Gas index underperformed, losing 1.7% for the week led by a 5% fall in Reliance Industries following lower than expected results.
- Mutual fund activity saw net equity outflows of Rs. 124 crore for the week, while FII activity showed net inflows of Rs. 721 crore.
1) Finolex Cables reported a 50.4% year-over-year increase in net sales to Rs. 493.1 crore for the first quarter of FY2011, driven by strong growth in the electrical cables segment.
2) Operating margins declined to 8% from 15.2% in the prior year quarter due to higher raw material costs, though margins improved sequentially.
3) Net profit increased 4.5% year-over-year to Rs. 23 crore for the quarter despite margin pressure, with sales growth offsetting higher costs.
GSPL reported a 1QFY2011 total operating income of Rs. 252 cr, a 19.4% increase over 1QFY2010 but slightly below expectations. EBITDA grew 20.3% to Rs. 238 cr but was also below estimates. Profits were higher year-over-year with PAT of Rs. 105 cr, up 30.6% from Rs. 80 cr in 1QFY2010, however profits were lower than expected. Transmission volumes increased 43.4% year-over-year but average transmission tariffs decreased 16.7% year-over-year, contributing to revenue being lower than estimated. Despite missing estimates, the analyst maintains an accumulate rating on GSPL due to growth potential
The document provides an overview of the Indian stock market performance on April 27, 2010. It summarizes that the key Indian indices closed with modest gains of 0.3-0.6%, led by outperformance in mid and small cap stocks. Select frontline stocks like Sterlite Industries and HDFC gained 2-6% while others like Sun Pharma and DLF declined 2-5%. The document also previews upcoming company earnings results and provides reviews of recent results from companies like GCPL, Indoco Remedies, and Maruti Suzuki.
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.
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.
HCL Technologies reported quarterly revenue growth of 1.4% sequentially and 7.5% year-over-year, driven by an 8.2% increase in billed efforts that offset a 1.2% decline in pricing and currency impact. Operating profit grew 1% sequentially due to a ramp-down in the BPO segment. Net profit increased 15.9% sequentially due to lower foreign exchange losses. The company added 2,441 employees during the quarter and won several large deals. Margins declined due to currency appreciation and increased hiring but profitability is expected to be sustained going forward.
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.
1. Mahindra and Mahindra (M&M) reported good results for the first quarter of the fiscal year 2011, with net sales up 21.6% and operating profit up 27.4% compared to the same period last year.
2. Net profit beat analyst expectations by 11%, reaching Rs. 562 crore due to lower than expected tax rates and higher interest income.
3. The report recommends maintaining a "Buy" rating for M&M, setting a target price of Rs. 772 based on the company's core business valuation and value of investments.
Mphasis reported 4.8% quarter-over-quarter revenue growth to Rs. 1,279 crore for 3QFY2010. The company saw mixed performance, with strong volume growth in application and ITO segments, but steep pricing cuts of 9.6% in applications. Margins declined slightly due to pricing changes and salary hikes, but were supported by restructuring in BPO and cost optimization in ITO. Revenue was driven by financial services, technology, and healthcare verticals, while telecom declined due to client issues. The company added 22 new clients spanning industries and saw improved wallet share with existing clients.
HT Media reported strong results for 1QFY2011 with revenues growing 22% year-over-year to Rs. 402.8 crore, driven by growth in advertising, circulation, radio, and internet revenues. Operating profits grew 55% to Rs. 78.6 crore due to a 410 basis point expansion in operating margins to 19.5% on the back of a 520 basis point increase in gross margins. Net profits increased 43.5% to Rs. 40.2 crore despite a rise in taxes and fall in other income, aided by top-line growth and lower interest costs. The company continued to see traction in its new businesses such as radio and internet.
HCL Technologies reported an 11.4% quarter-over-quarter revenue growth for the fourth quarter of FY2010, driven by a 10% volume growth. However, margins contracted due to lower utilization rates, currency impacts, and higher spending. While revenue grew, net profit declined slightly due to higher foreign exchange losses. Going forward, the company expects salary increases to impact margins in the first quarter of FY2011 but aims to offset this through operational improvements.
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
Infosys reported strong revenue growth of 12.1% quarter-over-quarter for 2QFY2011, driven by persistent volume growth of 7.2% and better business mix. Operating margins rebounded to 33.3% from cost efficiencies. The company revised its FY2011 revenue guidance upwards to 24-25% growth and EPS growth to 10.4-12.2% in US dollar terms. Broad-based growth was seen across industries like retail, BFSI, and manufacturing as well as geographies like Europe and the US. Hiring continued to be strong though utilisation improved.
Sun TV reported strong 1QFY2011 results with 53% year-over-year revenue growth and 43% PAT growth. Revenues grew due to a 50% increase in advertising revenue, 84% growth in DTH subscription revenue, and 42% growth in analogue subscription revenue. Operating margins expanded 397 basis points to 81.7% due to cost rationalization and operating leverage. The company maintained its Accumulate rating based on continued earnings and cash flow growth despite increasing its FY2012 EPS estimates 2-5% to account for margin expansion.
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.
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.
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.
Cipla reported subdued fourth quarter results due to lower-than-expected technical know-how fees, which decreased 86% year-over-year. Net sales were in-line at Rs. 1,318 crore, driven by domestic and export formulations. Operating margins declined to 15.2% due to higher employee expenses. For the full year, net sales grew 8% to Rs. 5,358 crore while operating margins expanded to 20.3%. Cipla expects 8-10% revenue growth in fiscal year 2011 and maintained operating margins of 20%, excluding technical fees. The company remains optimistic about contributions from its inhaled products in Europe and potential supply deals with global pharmaceutical companies.
Cipla reported subdued quarterly results with net sales growing only 6.7% year-over-year to Rs. 1,318 crore, below expectations. Operating margins fell due to higher expenses. However, full-year sales grew 8% to Rs. 5,358 crore, meeting guidance. Domestic formulations grew 8.5% while exports grew 5% except for APIs which fell 13.4% due to the appreciating rupee. The company expects 8-10% revenue growth in FY2011 and maintained operating margins but this excludes potential upside from new EU and US markets. The report maintains an "accumulate" rating as benefits of recent investments are expected after FY2012.
Cinemax India posted modest revenue growth of 34.1% in 4QFY10 aided by seat additions and big-budget movies, but operating margins declined 138bps due to higher film distribution and rent expenses. Bottom-line grew 353% due to negative tax provisions. The analyst maintains a Buy rating but lowers FY2011-12 estimates and target price to Rs85 due to lower revenue growth expectations and higher costs.
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.
MPL Result Update 4qfy2010-030510-finalAngel Broking
Madhucon Projects reported disappointing results for the fourth quarter of fiscal year 2010 that were below expectations. While revenue grew robustly due to higher subcontracting in the power segment, operating margins hit a historical low of 6.4% due to the heavy subcontracting. The analyst maintains a "Buy" rating but lowers the target price to Rs. 190 per share based on revised estimates factoring in lower margins and a higher holding company discount applied to the valuation of Madhucon Infra subsidiary. Near-term revenue visibility comes from existing power segment orders but margins are expected to remain under pressure from ongoing subcontracting.
HDFC Bank reported a 33.9% year-on-year increase in net profit to Rs. 812 crore for the first quarter of FY2011, which was close to analyst estimates. Key highlights included a 40.2% rise in loan advances and an improvement in asset quality. The bank saw robust growth across parameters such as net interest income, deposits, and CASA ratio. While recommending a 'Buy' rating, analysts believe HDFC Bank is well positioned for continued high quality growth driven by its expansion plans and improving economic conditions.
Similar to Tech Mahindra Result Update 4qfy2010-040510 (20)
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. 4QFY2010 Result Update I IT
May 04, 2010
Tech Mahindra BUY
CMP Rs 744
Performance Highlights Target Price Rs1,168
Tech Mahindra reported better-than-expected 4QFY2010 results, with revenue Investment Period 12 months
de-growth of 0.3% qoq at Rs1,183cr, as against our estimate of Rs1,164cr.
Revenue growth in constant currency was 4% at US $ 264mn; however, the Stock Info
sharp fall in the GBP (6%) resulted in revenue underperformance in the
Sector IT
reported currency. EBIDTA margins remained flat on a qoq basis at 23.6%,
despite rupee appreciation and strong net manpower addition of 3,120 Market Cap (Rs cr) 9,064
employees. Profit after tax was up 31.3% qoq, on account of lower interest
Beta 0.8
costs (down 32.3% qoq) and high other income of Rs74cr (including US
$13.5mn on account of Fx gains). We maintain our Buy recommendation on 52 WK High / Low
the stock. 1158/326
Avg. Daily Volume 2,61,167
Growth-backed by strong volumes from BT: The Revenue growth was largely Face Value (Rs) 10
driven by strong volume growth of about ~6.5% qoq in the Top account (BT),
whereas the rest of the clients recorded a cumulative volume growth of 1.8% BSE Sensex 17,929
qoq. The growth in BT was supported by a short-term (non-recurring) project in
Nifty 5,148
4QFY2010, and would continue its GBP 70-72mn run-rate in the coming
quarters. The operating profit remained flat at Rs279cr (as against Rs281cr in Reuters Code TEML.BO
3QFY2010), despite a negative Fx impact of ~4.5%. The lower realisations on
Bloomberg Code TECHM.IN
revenues were compensated to a certain extent, as the company managed a
US $13.5mn profit on account of exchange gains. The interest cost was down Shareholding Pattern (%)
by 32% qoq, as it paid another Rs350cr of loans from the restructuring fee
received in 3QFY2010. Thus, the bottom-line grew by 31.3% qoq to Rs227cr. Promoters 74.85
MF/Banks/Indian FLs 8.68
Outlook and Valuation: We expect Tech Mahindra to record an 11% CAGR in
its Top-line over FY2010-12E (excluding Mahindra Satyam), while the Bottom- FII/NRIs/OCBs 0.61
line is expected to grow at a compounded rate of 11.6% over FY2010-12E. We
Indian Public 15.86
have valued TechM on an SOTP basis, valuing Tech Mahindra (excluding
Satyam) at 13x of its expected FY2012E EPS of Rs67.8, at a 40% discount to Abs. (%) 3m 1yr 3yr
our Infosys target multiple of 22x (Historical discount of 22%), and valuing
Satyam’s stake at Rs274 per share, based on a Market cap basis, applying a Sensex 5.6 41.2 23.0
25% holding company discount, to arrive at a target price of Rs1,155. Hence,
TechM (21.4) 121.8 (54.9)
we maintain our Buy recommendation.
Key Financials (Consolidated excl. Mahindra Satyam)
Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
Net Sales 4,465 4,625 4,989 5,704
% chg 3.6 7.9 14.3 15.0
Net Profit 1,089 709 763 876
% chg 207.5 (31.0) 8.9 14.8
EBITDA Margin (%) 29.0 24.5 24.0 23.0
FDEPS (Rs) 77.6 53.6 58.3 67.0
P/E (x) 8.9 13.0 12.2 11.0 Rahul Jain
P/BV (x) 4.6 3.5 2.7 2.1 Tel: 022 – 4040 3800 Ext: 345
E-mail: Rahul.j@angeltrade.com
RoE (%) 63.0 30.6 24.9 22.0
RoACE (%) 85.9 76.7 82.7 73.4
Vibha Salvi
EV/Sales (x) 1.8 1.5 1.3 1.0
Tel: 022 – 4040 3800 Ext: 329
EV/EBITDA (x) 6.2 5.9 5.3 4.3
E-mail: vibhas.salvi@angeltrade.com
Source: Company, Angel Research
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539
2. Tech Mahindra I 4QFY2010 Result Update
Exhibit 1: 4QFY2010 Performance (Consolidated)
Y/E March (Rs cr) 4Q FY10 3Q FY10 % chg (qoq) 4Q FY09 % chg (yoy) FY2010 FY2009 % chg
Net Revenues 1,183 1,187 (0.3) 1,051 12.6 4,625 4,465 3.6
Cost of Revenues 737 751 (1.9) 611 20.6 2,871 2,571 11.7
Gross Profit 446 436 2.3 440 1.4 1,754 1,894 (7.4)
SG&A Expenses 167 155 7.7 156 7.4 622 612 1.7
Operating Profit (EBITDA) 279 281 (0.7) 284 (1.9) 1,133 1,283 (11.7)
Other Income 74 1 8 75 (38)
Interest 31 46 (32.3) 2 218 3
Depreciation 40 33 20.7 29 39.7 134 110 22.1
Income before Income Taxes 282 202 39.3 261 7.9 856 1,133 (24.5)
Tax 54 29 89.8 31 77.0 144 118 22.1
Minority Interest (1) (1) (35.2) (0) (3) (0)
Extraordinary Items - - (9) -
Net Income 227 173 31.3 230 (1.5) 700 1,015 (31.0)
Diluted EPS (Rs) 17.4 13.0 34.0 17.9 (2.7) 54.4 78.8 (31.0)
Gross Profit Margin (%) 37.7 36.7 41.8 37.9 42.4
EBITDA Margin (%) 23.6 23.6 27.0 24.5 28.7
Net Profit Margin (%) 19.2 14.6 21.9 15.1 22.7
Source :Company Data, Angel research
Top-line supported by Strong Volume growth in BT
Tech Mahindra’s revenues de-grew by 0.3% qoq (up 12.6% yoy), led by a strong
volume growth of 4.1% qoq. The volume growth in the Top account was up by
~6.5% supported by a short-term (non-recurring) project concluding in 4QFY2010.
However, the management has guided towards a sustained revenue run-rate of GBP
70-72mn from BT for the foreseeable future. The company is still negotiating for the
Andes deal, but is confident of maintaining its business flow from BT. The volume
for the non-BT business grew by ~1.8%. The contribution from the Top 2-5 clients
fell by 9% qoq to US $67mn (from US $74mn). Volumes for the BPO segment grew
by 8.2% qoq; thus, the company continued its hiring in the segment. The BPO
headcount has gone up to 8,087 in 4QFY2010 from 3,769 in 4QFY2009. The total
employee count touched 33,524 at the end of the quarter, with a net addition of
3,120. The company marked a net client addition of 3 clients to 113, largely in the
RoW (Rest of the World) market. Geography-wise, the growth momentum came
from Europe, where the total contribution grew by 1%, from 56% in 3QFY2010 to
57% in 4QFY2010, despite a severe Fx headwind (in terms of GBP depreciation
against the USD).
Exhibit 2: Revenue Mix Trend
750
700
650
600
550
500
(Rs cr)
450
400
350
300
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
BT Revenue Non BT Revenue
Source: Company Data, Angel research
May 4, 2010 2
3. Tech Mahindra I 4QFY2010 Result Update
EBITDA margins remain flat
The company witnessed a 98bp qoq reduction in the cost of revenues; however, the
SG&A spends moved up by 106bp qoq, resulting in a flattish EBIDTA margin for the
quarter.
Exhibit 3: EBITDA Margin Trend
34
32
30
28
(%)
26
24
22
20
1QFY08
2QFY08
3QFY08
4QFY08
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
Source: Company Data, Angel research
Interest costs went down by 32% qoq, as the company paid debt worth Rs350cr from
the restructuring fee received in 3QFY2010. The total debt as on FY2010E is
~1,370cr, at a cost of 7%. Other income of Rs74cr during the quarter lifted the
bottom-line by 31% qoq to Rs227cr. The other Income largely includes exchange
gains of about Rs60cr on the hedging portfolio. The effective Tax rate for the quarter
was 19.2%, as against 14.1% in 3QFY2010, on account of the higher other income
component. The profit margin, after adjusting for other income, showed an
improvement of 80bp, on a sequential basis, to 15.4%.
Profitability buoyed by lower interest costs and high Other Income
The operating margin for the quarter was maintained at 23.6% in 4QFY2010, as
the company saved on salary costs through higher efficiency, covering up for the
weaker realisations (due to the INR appreciation). The utilisation remained flat at
73%, absorbing the increase in employee additions. Going forward, margins may
come under pressure as the company may announce wage hikes in 1QFY2010, in
line with its competitors.
Mahindra Satyam Financial Performance likely to be announced by June 30, 2010
The Financials of Mahindra Satyam are likely to be declared by June 30, 2010,
which may add a profit contribution from the associate from 2QFY2011E. We have
valued Satyam on a market cap basis, providing for a 25% holding company
discount. The per share value of Satyam for TechM shareholders stood at Rs274.
May 4, 2010 3
4. Tech Mahindra I 4QFY2010 Result Update
Outlook and Valuation
Tech Mahindra has been consistently winning big deals in the telecom space and
has emerged as a preferred vendor of choice in the telecom vertical. The company
has been constantly expanding its focus into North America and Asia to cover up for
its stagnant revenue stream from the European market. We believe that the
uncertainty on restructuring with BT (46% of total revenues) has posed a severe
overhang on the future revenue growth of the company. However, the company has
been clocking strong revenue traction in the Non-BT business, registering a CQGR
of 7% over 1QFY2008-4QFY2010. The management is confident of maintaining
the business momentum with BT, with an expected annual run-rate of GBP
~285mn; thus, the revenue growth would largely remain a function of non-BT
business in FY2011E. The Net Profitability has dropped by 760bp in FY2010 over
FY2009 to 15.1%. We expect the company to maintain its profitability, as it has
headroom for efficiency in utilisation (73%) and S&M expenses, in view of its higher
business visibility (assured volume on the BT Strada project), which would cushion
margin pressures.
Exhibit 4: Key Financial Assumptions
FY2009 FY2010E FY2011E FY2012E
Revenue Mix (%)
BT 58 47 41 40
Non-BT 42 53 59 60
EBIT Margin (%)
BT 24.8 18.5 16.5 16.0
Non-BT 29.0 24.5 24.0 22.5
Source: Company, Angel Research
We expect Tech Mahindra to record an 11% CAGR in its Top-line over FY2010-12E
(excluding Mahindra Satyam), while the Bottom-line is expected to grow at a
compounded rate of 11.6% over FY2010-12E. We have valued TechM on an SOTP
basis, valuing Tech Mahindra (excluding Satyam) at 13x of its expected FY2012E
EPS of Rs67.8, at a 40% discount to our Infosys target multiple of 22x (Historical
discount of 22%), and valuing Satyam’s stake at Rs274 per share, based on a
Market cap basis, applying a 25% holding company discount, to arrive at a target
price of Rs1,155. Hence, we maintain our Buy recommendation.
Exhibit 5: One year forward P/E Band
2400
2200
2000
34x
1800
Share Price (Rs)
1600
1400 26x
1200
1000 18x
800
600 10x
400
200
0
Apr-07
Apr-08
Apr-09
Apr-10
Aug-06
Aug-07
Aug-08
Aug-09
Dec-06
Dec-07
Dec-08
Dec-09
Source: Company, Angel Research
May 4, 2010 4
5. Tech Mahindra I 4QFY2010 Result Update
Exhibit 6: Premium/Discount in Tech Mahindra P/E v/s Infosys P/E
25
15
5
(5)
(15)
(%)
(25)
(35)
(45)
(55)
(65)
(75)
Apr-07
Apr-08
Apr-09
Apr-10
Aug-06
Aug-07
Aug-08
Aug-09
Dec-06
Dec-07
Dec-08
Dec-09
Premium/Discount to Infosys Avg. Historical Discount to Infosys
Source: Company, Angel Research
May 4, 2010 5
6. Tech Mahindra I 4QFY2010 Result Update
Profit & Loss Statement (Consolidated) (Rs cr)
Y/E March FY2008 FY2009 FY2010E FY2011E FY2012E
Gross sales 3,766 4,465 4,625 4,989 5,704
Less: Excise duty - - - - -
Net Sales 3,766 4,465 4,625 4,989 5,704
Other operating income - - - - -
Total operating income 3,766 4,465 4,625 4,989 5,704
% chg 28.6 18.5 3.6 7.9 14.3
Total Expenditure 3,377 3,172 3,493 3,791 4,390
Cost of Services 608 704 745 828 961
SGA 752.7 599.0 651.8 708.5 801.4
Personnel 1,577 1,868 2,096 2,254 2,627
Others 440.0 - - - -
EBITDA 389 1,293 1,133 1,198 1,314
% chg 78.7 232.4 (12.4) 5.8 9.6
(% of Net Sales) 10.3 29.0 24.5 24.0 23.0
Depreciation& Amortisation 79.6 109.7 133.9 159.4 181.3
EBIT 309 1,183 999 1,039 1,133
% chg 86.2 282.4 (15.6) 4.0 9.0
(% of Net Sales) 8.2 26.5 21.6 20.8 19.9
Interest & other Charges 6.2 2.5 218.4 119.0 34.0
Other Income 27.3 26.5 75.4 10.0 10.0
(% of PBT) 8.3 2.2 8.8 1.1 0.9
Share in profit of Associates - - - - -
Recurring PBT 330.5 1,207.3 855.6 930.0 1,108.6
% chg 150.0 180.2 (25.2) 9.8 19.2
Extraordinary Expense/(Inc.) (73.7) 74.8 8.5 - -
PBT (reported) 404.2 1,132.5 847.1 930.0 1,108.6
Tax 74.8 117.9 144.0 167.4 232.8
(% of PBT) 18.5 10.4 17.0 18.0 21.0
PAT (reported) 329.4 1,014.6 703.2 762.6 875.8
Add: Share of earnings of associate - - - - -
Less: Minority interest (MI) (0.5) 0.1 2.8 0.0 0.0
Prior period items - - - - -
PAT after MI (reported) 329.9 1,014.5 700.4 762.6 875.8
ADJ. PAT 256.2 1,089.3 708.9 762.6 875.8
% chg 276.6 207.5 (31.0) 8.9 14.8
(% of Net Sales) 8.8 22.7 15.1 15.3 15.4
Basic EPS (Rs) 27.2 83.3 57.3 60.7 67.8
Fully Diluted EPS (Rs) 25.6 77.6 53.6 58.3 67.0
% chg 276.6 207.5 (31.0) 8.9 14.8
May 4, 2010 6
7. Tech Mahindra I 4QFY2010 Result Update
Balance Sheet (Consolidated) (Rs cr)
Y/E Mar FY2008 FY2009 FY2010E FY2011E FY2012E
SOURCES OF FUNDS
Equity Share Capital 121.4 121.7 122.2 125.7 129.2
Preference Capital - - - - -
Reserves& Surplus 1,147 1,833 2,509 3,373 4,349
Shareholders Funds 1,268 1,954 2,631 3,499 4,478
Total Loans 30.0 - 1,400 800 -
Deferred Tax Liability (6.0) (19.6) - - -
Total Liabilities 1,292 1,935 4,031 4,299 4,478
APPLICATION OF FUNDS
Gross Block 635 900 1,100 1,275 1,450
Less: Acc. Depreciation 310 410 544 703 885
Net Block 325.0 490.3 556.4 572.0 565.7
Capital Work-in-Progress 164.0 154.1 204.1 229.1 179.1
Others 110.6 7.6 7.6 7.6 7.6
Investments 63 435 2,947 2,872 2,822
Current Assets 1,556 1,737 2,103 2,321 2,541
Cash 98 538 806 958 1,069
Loans & Advances 256.8 295.3 330.3 310.3 310.3
Other 1,202 904 967 1,052 1,162
Current liabilities 927 889 1,787 1,702 1,637
Net Current Assets 629 848 316 619 904
Mis. Exp. not written off - - - - -
Total Assets 1,292 1,935 4,031 4,299 4,478
Cash Flow Statement (Consolidated) (Rs cr)
Y/E March FY2008 FY2009 FY2010E FY2011E FY2012E
Profit before tax 404.2 1,132.5 847.1 930.0 1,108.6
Depreciation 79.6 109.7 133.9 159.4 181.3
Change in Working Capital (155.6) 131.7 819.3 (150.0) (175.0)
Less: Other income 33.7 (38.8) 78.1 10.0 10.0
Direct taxes paid 99.9 190.2 144.0 167.4 232.8
Cash Flow from Operations 194.6 1,222.5 1,578.2 762.0 872.1
(Inc)./ Dec in Fixed Assets (229.6) (251.3) (250.0) 200.0 125.0
(Inc)./ Dec. in Investments 38.9 (377.8) (2,512.0) (75.0) (50.0)
(Inc)./ Dec. in loans and advances
Other income 11.2 15.1 75.4 10.0 10.0
Cash Flow from Investing (179.5) (614.0) (2,686.6) 115.0 65.0
Issue of Equity 1.1 3.1 25.5 178.5 178.5
Inc./(Dec.) in loans 15.3 (30.0) 1,400 (600) (800)
Dividend Paid (Incl. Tax) 6.2 137.7 49.6 72.9 74.9
Others
Cash Flow from Financing 10.2 (164.6) 1,375.9 (494.4) (696.4)
Inc./(Dec.) in Cash 25.3 443.9 267.5 152.6 110.7
Opening Cash balances 67.4 92.7 538.2 805.7 958.3
Closing Cash balances 92.7 538.2 805.7 958.3 1,069.0
May 4, 2010 7
9. Tech Mahindra I 4QFY2010 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 Tech Mahindra
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
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May 4, 2010 9