Indian stock market and companies daily report (February 10, 2012, Friday)

The domestic markets are expected to open flat to negative tracking negative opening in most of the Asian markets. Indian markets rose on Thursday, with the Nifty index hitting a 27-week high, as optimism that Greek leaders are nearing an agreement on austerity measures, that could secure them a new €130bn bailout from the EU and the IMF, easing some of the concerns about the nation's ongoing going debt crisis.

Globally, U.S. stocks closed in green yesterday mainly on the back of positive news about Greece as well as some upbeat U.S. jobs data. The U.S. Labor Department reported that the initial jobless claims for U.S. fell to 358,000 in the week ended February 4th from the previous week's revised figure of 373,000. Indian investors, meanwhile, would keenly watch out for the domestic industrial production growth (Bloomberg estimate – 2.6%) for the month of December due to be released today. Also, consumer sentiment and trade balance data of the U.S. will be on radar.

Markets Today

The trend deciding level for the day is 17,773 / 5,392 levels. If Nifty trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,937 – 18,043 / 5,444 – 5,476 levels. However, if Nifty trades below 17,773 / 5,392 levels for the first half-an-hour of trade then it may correct up to 17,667 – 17,503 / 5,360 – 5,307 levels.

3QFY2012 - Result Reviews

Tata Steel

For 3QFY2012, Tata Steel reported net loss on a consolidated basis due to weak performance from its European and Southeast Asian operations. Consolidated net sales increased by 13.8% yoy to Rs.33,103cr, above our estimate of Rs.30,992cr, mainly on account of increased average realizations in rupee terms. Standalone net sales increased by 12.3% yoy to Rs.8,305cr. Consolidated sales volumes stood at 5.8mn tonnes in 3QFY2012 compared to 5.9mn tonnes in 3QFY2011. Average realization/tonne decreased by 3.4% and 0.6% to US$975 and US$1,149 in Tata Steel India and Tata Steel Europe operations, respectively. However, EBITDA/tonne decreased by 7.1% and US$303 in Tata Steel India. EBITDA/tonne of Tata Steel Europe operations stood at US$(1) compared to US$25 in 3QFY2011 on account of higher raw-material costs. India operations EBITDA decreased by 9.5% yoy to Rs.2,553cr. European operations reported EBITDA of US$(147)mn and Southeast Asian operations reported EBITDA of US$(2)mn during the quarter. Consequently, consolidated EBITDA decreased by 49.9% yoy to Rs.1,717cr. Hence, Tata Steel reported net loss of Rs.603cr in 3QFY2012 compared to adjusted PAT of Rs.1,125cr in 3QFY2011. The company’s net debt has increased to US$9.5bn as on December 31, 2011, compared to US$8.5bn as on September 30, 2011. Tata Steel’s Jamshedpur 2.9mn tonnes brownfield expansion project remains on track to be completed during 4QFY2012. We maintain our Buy recommendation on the stock, while we keep our target price under review.

Hindalco

Hindalco’s standalone 3QFY2012 top line was above our estimate, while its bottom line was slightly below our expectation. The company’s net sales increased by 11.4% yoy to Rs.6,590cr (above our estimate of Rs.5,909cr) mainly on account of higher volumes in the aluminium and copper segments. In the aluminium segment, alumina, aluminium, wire rods and flat products production increased by 7.1%, 7.8%, 6.7% and 20.4% yoy to 343k, 146k, 25k and 56k, respectively. In the copper segment, copper cathode and CC rods production grew by 9.4% and 42.3% yoy to 88k and 38k, respectively. However, the aluminium segment’s EBIT decreased by 33.4% yoy to Rs.310cr due to increased input costs (mainly coal and crude derivatives). Nevertheless, the copper segment’s EBIT rose by 51.1% yoy to Rs.216cr due to higher treatment and refining charges and by-product credits. Overall, Hindalco’s EBITDA decreased by 3.3% yoy to Rs.716cr and EBITDA margin slipped by 165bp yoy to 10.9% during 3QFY2012. Interest expenses grew by 53.8% yoy to Rs.79cr and other income grew by 48.6% yoy to Rs.90cr. Consequently, net profit decreased by only 1.9% yoy to Rs.452cr (below our estimate of Rs.480cr). The company reported that all its expansion plans are on track. The stock is under review currently.

Ambuja Cements

During 4QCY2011, Ambuja Cements’ standalone top line increased strongly by 30.2% yoy to Rs.2,329cr on account of 17.5% yoy improvement in realization to Rs.4,197/tonne and a 10.8% yoy increase in volumes to 5.55mn tonnes. OPM declined by 60bp yoy to 19.1% on account of higher raw-material costs, power and fuel costs and freight costs. On the bottom-line front, net profit for the quarter rose by 17% yoy to Rs.302cr, aided by better operating performance, 72.2% yoy growth in other income to Rs.65cr and 53% saving in interest expense to Rs.10cr. Reported net profit was lower by Rs.33cr on account of an exceptional item relating to change in accounting method for stock options, adjusting for which net profit would have grown by 30% yoy. We continue to remain Neutral on the stock.

ACC

ACC posted 27.8% yoy growth in its standalone net sales to Rs.2,503cr on account of 17.8% growth in sales volumes and 20.3% higher realization. The company’s sales volumes for the quarter stood at 5.95mn tonnes, up 6.3% yoy, on account of higher capacity (on a yoy basis) operational at Wadi and Chanda during the quarter. Further, realization stood higher by 20.3% yoy to Rs.4,206/tonne. Despite the substantial yoy improvement in realization, OPM rose only marginally by 100bp due to the surge in operating costs. The company’s net profit rose by 83.8% yoy to Rs.470cr. The company’s profit was boosted by tax credit of Rs.228cr during the quarter (vs. 82cr in 4QCY2010), adjusted for which profit would have been at Rs.242cr higher by 39.3% yoy. We remain Neutral on the stock.

Apollo Tyres

Apollo Tyres (APTY) registered robust results for 3QFY2012 with consolidated top line posting better-than-expected 36.3% yoy (12.4% qoq) growth to Rs.3,228cr, aided by an 18.2% yoy (8.3% qoq) jump in volumes and 15.3% yoy (3.8% qoq) increase in net average realization. Domestic, Europe and South Africa revenue grew strongly by 46.2%, 26.3% and 27.9% yoy, respectively. Operating margin expanded by 202bp qoq to 10%, mainly due to 100bp savings on the raw-material front. As a result, adjusted net profit grew by 63.8% qoq to Rs.127cr. However, on a yoy basis, adjusted net profit reported modest 5.8% yoy growth, largely due to contraction in operating margin and higher interest expense (up 38.2% to Rs.73cr). During the quarter, APTY made a provision of Rs.29cr in relation to a penalty following settlement agreement with South Africa Competition Commission for the company’s operations in South Africa. At Rs.76, the stock is trading at 6.8x its FY2013E earnings. We retain our Buy recommendation on the stock; however, the target price is under review. We shall release a detailed result note soon.

MRF – 1QSY2012

MRF reported top-line growth of 32.7% yoy to Rs.3,138cr in 1QSY2012 from Rs.2,367cr in 1QSY2011. The company’s EBITDA margin came in at 9.0%, 174bp higher on a qoq basis, on account of a decrease in overall expenses as a percentage of sales. On the profitability front, MRF reported an increase of 9.7% yoy, from Rs.103cr to Rs.113cr. We maintain our Buy recommendation on the stock with a target price at Rs.9,647, based on a target PE of 8x its SY2013E earnings.

Page Industries

Page Industries announced its 3QFY2012 numbers. The company’s net sales increased by 28.4% yoy to Rs.172cr (Rs.134cr). EBITDA improved only by 6.3% yoy to Rs.30cr (Rs.28cr), despite higher revenue growth due to margin compression. EBITDA margin declined by 356bp yoy to 17.2% (20.7%), mainly due to higher raw-material cost, which increased to 51.2% of net sales in 3QFY2012 vs. 48.3% of net sales in 3QFY2011. Despite lower growth in EBITDA, PAT increased by 27.6% yoy to Rs.20cr (Rs.16cr), in-line with top-line growth on the back of higher other income, which increased by 78.2% to Rs.4cr and lower tax rate, which came in at 31.5% in 3QFY2012 vs. 41.6% in 3QFY2011. PAT margin declined marginally by 7bp yoy to 11.6%. We will be coming out with a detailed report post management interaction. We continue to maintain our Neutral recommendation on the stock.

FAG Bearings - 4QCY2011

FAG Bearings (FAG) registered a strong performance in 4QCY2011, with betterthan- expected net sales growth of 31.4% yoy (4.8% qoq) to Rs.350cr against our expectation of Rs.310cr. EBITDA margin contracted by 150bp yoy (170bp qoq) to 18.1% mainly due to higher raw-material expenses. Raw-material cost increased primarily on the trading part of the business, which we believe could be due to the depreciation of INR against the Euro. Purchase of traded goods as a percentage of sales jumped substantially by 480bp yoy during the quarter. However, 380bp yoy savings in other expenditure arrested further fall in margins. Led by strong top-line performance net profit posted better-than-expected 27.3% yoy growth to Rs.43cr. We expect the company to sustain its strong performance going ahead, led by likely easing of interest rates from 1QFY2013, which is expected to revive demand in the automotive and industrial segment. We maintain our Buy view on the stock; however, our target price is under review.

Anant Raj

Anant Raj Industries announced its 3QFY2012 numbers. Net sales declined by 25.9% yoy to Rs.92cr (Rs.124cr), well below our estimate. EBITDA declined by 36.5% yoy to Rs.49cr (Rs.77cr) due to lower revenue and margin compression. EBITDA margin declined by 888bp yoy to 53.2% (62.1%). Adjusted PAT declined by 37.3% yoy to Rs.31cr (Rs.50cr) and PAT margin declined by 622bp yoy to 31.5% (50.3%), almost in-line with EBITDA margin contraction. We will be coming out with a detailed report post management interaction. We have an Accumulate rating on the stock with a target price of Rs.78.

HAIL – 4QCY2011

Honeywell announced its 4QCY2011 numbers. The top line grew by 21% qoq to Rs.503cr in 4QCY2011 from Rs.412cr in 4QCY2010. Annual sales for CY2011 stood at Rs.1619, 19% higher from CY2010. The company's margin came in at 9.1%, 259bp higher on a qoq basis, on account of a decrease in raw-material and employee cost as percentage of sales. Net profit for the quarter rose by 31.5% yoy, from Rs.25.7cr to Rs.33.9cr. Annual net profit stood at Rs.107cr, 6.7% higher yoy. We maintain our Buy recommendation on the stock; our target price is under review.

Dishman Pharmaceutical

For 3QFY2012, Dishman Pharmaceutical posted net sales of Rs.265.5cr, registering 14.5% yoy growth. The company’s growth was driven by the MM segment, which reported 30.9% yoy growth. The CRAMS segment reported 6.9% yoy growth. The company’s OPM came in at 15.9%; however, adjusted for forex losses, it stood at 20.1%. The company reported higher tax expenses during the quarter. Consequently, net profit came in at Rs.16.7cr, lower than our expectation of Rs.19.8cr. However, given the traction in growth and improving profitability, we maintain our Buy rating on the stock; the target price is under review.

JK Tyre

JK Tyre (JKI) reported dismal set of results for 3QFY2012, posting net loss on the bottom-line front, led by higher interest expense and forex loss of Rs.38cr. For 3QFY2012, net sales grew strongly by 20.7% yoy (10.4% qoq) to Rs.1,423cr. Operating performance bounced back sequentially with EBITDA margin expanding by 297bp to 5.1%, driven by raw-material cost savings (100bp qoq) and decline in other expenditure (200bp qoq). JKI, however, posted net loss of Rs.21cr on account of an 87.8% yoy increase in interest expense to Rs.45cr and forex loss of Rs.38cr. The stock rating is currently under review.

3QFY2012 - Result Previews

DLF

DLF is expected to announce its 3QFY2012 results. We expect the company’s net sales to increase by 9.6% yoy to Rs.2,719cr. EBITDA margin is expected to contract by 377bp yoy to 43.7% on account of higher input costs. Net profit is expected to decline by 11.1% yoy to Rs.414cr. We maintain our Neutral rating on the stock.

RCom

Reliance Communication (RCom) is slated to announce its 3QFY2012 results. We expect the company to record revenue of Rs.4,968cr, up 3.7% qoq. Growth is expected primarily on the back of qoq flat ARPM at Rs.0.45/min and 1.0% qoq growth in MOU to 229min. EBITDA margin is expected to increase by 83bp qoq to 29.1%. PAT for the quarter is expected to come in at Rs.144cr. We maintain our Neutral view on the stock.

Britannia

Britannia is expected to announce its 3QFY2012 results. For the quarter, we expect Britannia to report healthy 18% yoy growth in revenue to Rs.1,271 due to improvement in sales mix. For the quarter, we expect the company to report an 11bp yoy margin improvement. Earnings for the quarter is expected to grow by 20% yoy to Rs.45cr on the back of healthy top-line growth. At the CMP, the stock is trading at 21.7 x F2013E EPS of Rs.22.5. We recommend Neutral on the stock.

Aurobindo Pharma

For 3QFY2012, Aurobindo Pharma is expected to post net sales of Rs.1,295cr, registering 20.8% yoy growth. The company is expected to post OPM of 12.1%, reporting a dip of 652bp yoy. Net profit is expected to come in at Rs.98.5cr, down 49% yoy. At the CMP, the stock is trading at 8.4x FY2013. We continue to maintain our Buy recommendation on the stock with a target price of Rs.166.

CCCL

Consolidated Construction Consortium (CCCL) is expected to post modest 8.0% yoy growth in its top line to Rs.535.9cr, given the slow-moving infra orders forming ~40% of its total order book. On the EBITDA front, we expect the company to continue to report a dismal performance and register a dip of 654bp yoy to 3.2%, in-line with management's guidance. Against this backdrop, the bottom line is expected to post loss of Rs.5.2cr in 3QFY2012 vs. profit of Rs.16.7cr in 3QFY2011. We continue to maintain our Neutral view on the stock.

Economic and Political News
- Current account deficit seen widening as exports struggle
- Government nods for JVs by defense PSUs
- Exports up 10.1%; Imports jump by 20.3% in January 2012

Corporate News
- Additional tax on diesel cars will further impede industry growth: M&M
- CEAT to set up Rs.250cr plant in Bangladesh
- Tata Global, PepsiCo JV eyes Rs.700cr turnover in the next five years
- Tulip Telecom CEO Sanjay Jain quits
- Unity Infraprojects bags orders worth Rs.485cr

Open Demat Account in leading stock market company in India for Online Share Trading

Indian stock market and companies daily report (February 07, 2012, Tuesday)

The domestic markets are expected to open in the green tracking positive opening in most of the Asian markets. Indian markets extended their bull run on Monday, with shares hitting fresh 14.5 week highs in early trading as positive economic data from the US raised hopes the global economy will withstand the impact of Europe's debt crisis.
Globally, US stocks retreated from multi-year highs on Monday as Greece struggled for an agreement on spending cuts needed to ensure another round of rescue funds. Greece missed a deadline on enacting reforms necessary to receive a new bailout from the European Union and the International Monetary Fund. Selling pressure remained subdued, however, limiting the downside for the markets. Indian investors this week, meanwhile, would keenly watch out for the domestic industrial production growth for the month of December due to be released on Friday. Also, consumer comfort index of US which will be released on coming Thursday will be on radar.

Markets Today
The trend deciding level for the day is 17,711 / 5,360 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,826 – 17,945 / 5,392 – 5,422 levels. However, if NIFTY trades below 17,711 / 5,360 levels for the first half-an-hour of trade then it may correct up to  17,592 – 17,476 / 5,392 – 5,297 levels.

L&T bags order worth Rs.1,937cr
Larsen & Toubro's (L&T) construction arm has bagged a road project worth Rs.1,937cr from the GVK Group to widen a highway in Madhya Pradesh. The contract involves designing, engineering and construction for four-laning of a major portion of Shivpuri-Dewas section of NH-3 totaling 235km. The construction period is 27 months.
At the CMP of Rs.1,383, the stock is trading at PE of 19.5x FY2013E earnings, which is below the historical trading multiple for L&T. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in the different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,607, which provides 16.2% upside from current levels. Hence, we maintain our Buy view on the stock.

Upstream oil firms to bear higher subsidy
Media reports suggests that state-run upstream companies will share 38.0% of the revenue losses (under-recoveries) suffered by oil marketing companies (OMCs) due to selling fuels at discounted prices for the period April–December 2011. The upstream companies had shared 33.0% of under-recoveries during 1HFY2012. During April–December 2011, total under-recoveries of OMCs stood at Rs.97,300cr.
Thus, ONGC will have to bear subsidy burden of Rs.30,296cr for April–December 2011, which is expected to result in additional subsidy burden of Rs.12,536cr during 3QFY2012. We had pegged upstream companies share of under-recoveries at 38.0% for FY2012 and, thus, do not change our estimates. We maintain our Buy rating on ONGC with a target price of Rs.324.

3QFY2012 - Result Reviews
HUL
HUL posted a healthy set of numbers for the quarter, in-line with our estimates. The company’s top line grew by 16.4% yoy to Rs.5,853cr. Earnings for the quarter grew by 18% yoy, marginally above our estimate, to Rs.754cr. The company’s top line was driven by modest volume growth of 9% yoy. Overall, FMCG sales grew by 17% yoy, aided by 18% yoy growth in the home and personal care (HPC) and 13% yoy growth in foods businesses. During the quarter, the soaps and detergent (S&D) segment posted 21% yoy revenue growth, while its EBIT margin expanded by 573bp yoy to 13.5%. The packaged food business reported 13.5% yoy growth. The personal products segment grew by 14% yoy. At the operating level, OPM expanded by 271bp yoy to 15.1% for 3QFY2012. The company cut its ad spends and other expenses and negated the affect of gross margin pressure. We maintain our Neutral rating on the stock.
Nalco
Nalco reported disappointing 3QFY2012 results. The company’s net sales grew by 0.4% yoy to Rs.1,430cr (below our estimate of Rs.1,770cr). Raw-material costs as a percentage of net sales stood at 16.7% in 3QFY2012 compared to 8.4% in 3QFY2011. Further, power costs as a percentage of net sales stood at 39.7% compared to 31.1% in 3QFY2011. Hence, EBITDA decreased by massive 83.6% yoy to Rs.64cr and EBITDA margin contracted by 2,287bp yoy to 4.5%. Other income, however, grew by 46.4% yoy to Rs.131cr. Consequently, net profit decreased by 80.0% yoy to Rs.51cr (significantly below our estimate of Rs.224cr). We maintain our Neutral view on the stock.
GSK Consumer
For 4QCY2011, GSK Consumer reported a modest performance, which was below with our estimate on the revenue and earnings fronts. The company’s top line grew by 18.6% yoy to Rs.602cr (Rs.508cr). On the operating front, the company recorded a 127bp yoy decrease in its operating margin to 10.2%, primarily on account of higher ad spends and other expenditure. However, the fall in OPM was curbed by reducing the staff cost by 174bp yoy. Earnings for the quarter grew by 10.7% yoy to Rs.59cr (Rs.53cr) on account of higher other income. The stock is under review.
MOIL
MOIL’s 3QFY2012 results were slightly below our expectations. Net sales decreased 5.4% yoy to Rs.240cr (slightly below our estimate of Rs.248cr) which would be mainly on account of decrease in average realizations in our view. EBITDA decreased 11.1% yoy to Rs.109cr. EBITDA margin dipped 293bp yoy to 45.7% on account of slump in manganese ore prices. Other income stood flat yoy to Rs.50cr, while tax rate was higher at 33.2%, compared to 30.5% in 3QFY2011. Consequently, net profit decreased 11.9% yoy to Rs.102cr, slightly below our estimate of Rs.106cr. We maintain our Neutral view on the stock.
India Cements
For 3QFY2012, India Cements registered healthy 20.5% yoy growth in its top line to Rs.944cr on account of a substantial 16.2% yoy increase in cement realization to Rs.4,262/tonne and reasonable 6.9% yoy growth in dispatches to 2.18mn tones, as retail cement demand has picked up in South India, which is the company’s major market. Southern region posted demand growth of 3.3% yoy during the quarter. OPM rose by 443bp yoy to 20.9% due to better cement realization despite higher power and fuel and freight costs. Power and fuel cost per tonne increased by 7.4% yoy during the quarter on account on higher coal imports, costlier domestic coal and higher power tariffs in Andhra Pradesh. Freight costs per tonne were higher by 5.1% yoy on account of increased railway freight and higher price of petroleum products. The bottom line came at Rs.56cr, registering growth of 162.3% yoy. We maintain our Neutral view on the stock.
BGR Energy
BGR Energy (BGR) posted a mixed set of numbers for 3QFY2012. As expected, the company’s top line for the quarter stabilized on prior-year period’s high base; however, earnings exceeded estimates owing to better-than-expected show on the operating front. The company’s top line declined by 36.1% yoy to Rs.803.7cr (Rs.1,257cr), which was lower by 10.8% (below street) than our expectation of Rs.901.1cr. The downside in revenue mainly came from the construction and EPC segment, which declined by 38.8.% yoy to Rs.727.1cr (Rs.1,118cr). In contrast, the capital goods segment posted decent 19% yoy growth to Rs.75.2cr (Rs.63.2cr). On the EBITDA front, the company’s margin posted a positive surprise – EBITDAM  eported a sharp expansion of 463bp yoy to 16.3%, against our estimate of 12%. Margin was mainly aided by lower raw-material costs, which contracted by 730bp yoy to 73.1% as a proportion of revenue. Segment wise, the capital goods as well and construction and EPC segment offered upside to the margin, expanding more than ~400bp. As is the case since the past few quarters, we believe the construction and EPC segment would have been positively impacted by higher execution of BoP projects.
Interest cost during the quarter rose by 175% yoy/53% qoq to Rs.46.2cr, probably due to enhanced working capital debt, in our view. Led by slumped revenue, PAT declined by 37.5% yoy to Rs.54.7cr (Rs.87.6cr), however striking EBITDAM influenced the bottom line considerably – PAT came in 16% higher than our (below street) estimate of Rs.47.2cr.
Order backlog at the end of the quarter stood at Rs.8,000cr, largely aided by the Rs.1,700cr worth of order secured during the quarter. Notably, with 9MFY202 totaling mere ~Rs.2,300cr, we believe it will be challenging for the company to exceed Rs.4,000cr plus revenue target for FY2012 (management guidance). We would like to hear management’s commentary on the company’s future outlook and get more details over the quarterly numbers post which we will revise our estimates and recommendation. Currently, we remain Neutral on the stock.
Bajaj Electricals
Bajaj Electricals (BEL) posted top-line growth of 15.1% yoy to Rs.794cr (Rs.690cr) in 3QFY2012. The lighting segment registered strong 18.8% yoy growth to Rs.200cr (Rs.168cr) and the consumer durable segment registered a 24.7% yoy increase to Rs.414cr (Rs.332cr). The E&P segment registered a 5.1% yoy decline to Rs.179cr (Rs.190cr). EBITDA declined by 8.6% yoy to Rs.65cr (Rs.71cr), largely due to margin compression. EBITDA margin declined by 212bp yoy to 8.2% (10.3%), mainly due to higher other expenditure, which increased to 12.7% of net sales vs. 10.7% in 3QFY2011. PAT declined by 19.1% yoy to Rs.33cr (Rs.41cr), while margin declined by 175bp yoy to 4.1% (5.9%). We will be coming out with a detailed report post management interaction. We continue to maintain our Buy rating on the stock with a target price of Rs.201.
NCC
Nagarjuna Construction Company (NCC) posted a poor set of numbers for 3QFY2012, below our and street expectations. The company’s top line declined by 5.4% yoy to Rs.1,264cr, which was marginally above our expectation of Rs.1,215cr (Consensus: Rs.1,271cr). On the EBITDAM front, the company’s margin stood at shocking 6.1% (10.3%), registering a dip of 350bp yoy and lower than our estimate of 9.5% due to provisions (~Rs.15cr) and time and cost overruns in few projects. Interest cost came in at Rs.69.4cr, registering a yoy jump of 58.3% but a decline of 2.2% on a sequential basis. On the bottom-line front, NCC reported loss of Rs.9.5cr in 3QFY2012 vs. profit of Rs.40.5cr in 3QFY2011, against our estimate of PAT of Rs.14.0cr (Consensus: Rs.26.4cr), owing to decline in top-line and dismal margin performance. The current outstanding order book of NCC stands at Rs.21,990cr, with order inflow of Rs.9,943cr for 9MFY2012. Owing to the abysmal performance in the quarter and recent run-up in the stock price, we recommend Neutral on the stock.
GIPCL
GIPCL posted 26.9% yoy growth in its top line to Rs.391cr, driven by higher fuel costs as generation remained flat at 1,181MU. Vadodara stations I and II had PAF of 96.1% (93.7% in 3QFY2011) and 95.1% (100% in 3QFY2011), respectively. SLPP I and II stations operated at PAFs of 83.9% (89.2% in 3QFY2011) and 61.6% (60% in 3QFY2011), respectively. OPM for the quarter  stood at 24.1%, down 1,484bp on yoy basis due to higher gas prices. GIPCL’s 3QFY2012 bottom line fell by 30.6% yoy to Rs.17cr. We maintain our Buy rating on the stock, but the target price is under review.
SpiceJet
SpiceJet announced its 3QFY2012 numbers. The company’s net sales increased by 41.6% yoy to Rs.1176cr (Rs.830cr), on the back of fleet additions during the year. EBITDA declined by 117% yoy to negative Rs.19cr vs. positive Rs.114cr in 3QFY2011. EBITDA margin declined by 1,536bp yoy to negative 1.6% vs. positive 13.7% in 3QFY2011, mainly due to higher fuel costs, which increased to 50.4% of net sales vs. 37.5 in 3QFY2011. Consequently, PAT came in at negative Rs.39cr vs. profit of Rs.94cr in 3QFY2011. We will be coming out with a detailed report post management interaction. We continue to maintain our Neutral recommendation on the stock.
Siyaram Silk Mills
Siyaram Silk Mills announced its 3QFY2012 numbers. Net sales declined by 2.6% yoy to Rs.222cr (Rs.244cr). EBITDA declined by 2.0% yoy to Rs.29cr (Rs.30cr) due to lower revenue. EBITDA margin improved marginally by 9bp yoy to 13.2% (13.1%). PAT declined by 17.0% yoy to Rs.13cr (Rs.16cr), while margin declined by 103bp yoy to 5.9% (7.0%) largely due to higher depreciation and interest cost because of capacity expansion during the quarter. Depreciation increased by 18.1% yoy to Rs.6.3cr (Rs.5.4cr), while interest cost increased by 92.0% yoy to Rs.6.9cr (Rs.3.6cr). We will be coming out with a detailed report post management interaction. We continue to maintain our Buy view on the stock with a target price of Rs.426.

3QFY2012 - Result Previews
Mahindra and Mahindra
Mahindra and Mahindra (MM) is slated to announce its 3QFY2012 results. We expect the company’s top line to grow by robust 31.4% yoy to Rs.7,981cr, backed by impressive 24% yoy growth in total volumes. On the operating front, EBITDA margin is expected to witness a decline of 313bp yoy to 12% on account of increased purchases from manufacturing subsidiary MVML. As a result, the bottom line is expected to report a modest increase of 6% yoy to Rs.654cr. The stock rating is under review.
Cadila
Cadila Healthcare (Cadila) is expected to post yet another strong quarter with 12.6% yoy growth in its net sales to Rs.1,278cr on the back of robust growth on the domestic formulation and exports front. On the OPM front, we expect the company's OPM to dip by 160bp yoy to 21.3% on the back of favorable product mix. Cadila's net profit is expected to increase by 19.1% yoy to Rs.193cr, driven by top-line growth. We maintain our Buy rating on the stock with a target price of Rs.965.
ITNL
We expect IL&FS Transportation Networks (ITNL) to post a strong set of numbers for 3QFY2012 on account of higher number of projects in hand. The company’s revenue is expected to grow strongly by 78.0% yoy to Rs.1,306cr, led by underconstruction road BOT projects. We expect the company to register EBITDAM of 27.3%, down 279bp yoy, owing to higher contribution of the comparatively lowmargin E&C segment. Strong revenue growth is expected to reflect in the company’s earnings, which are expected to surge by 94.2% yoy to Rs.119.7cr. Owing to the recent sharp run-up in the stock price, we recommend an Accumulate view on the stock with a target price of Rs.227.
JK Lakshmi Cement
JK Lakshmi Cement is expected to announce its 3QFY2012 results today. We expect the company’s top-line to grow by 11.4% yoy to Rs.351cr on account of higher yoy realization. On operating front, margins are expected to improve by 550bp yoy to 13.4% aided by higher realization. The company’s net profit is expected to grow by 92% yoy to Rs.9cr (though on a lower base of last year). We recommend Neutral on the stock.

Economic and Political News
- Oil dips below US$114, Greek debt, Iran in focus
- India faces challenges on stable rating outlook, says S&P
- Upstream oil companies to bear 38% of subsidy share
- RBI marginally relaxes FX curbs for banks with big open positions

Corporate News
- LIC to pick 5% stake in Dena Bank
- Petronet in talks with Kerala government for power plant at Kochi
- PFC to raise Rs.40,000cr in FY2013
- SKS raises Rs.243cr via securitization

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Indian stock market and companies daily report (February 07, 2012, Tuesday)

The domestic markets are expected to open in the green tracking positive opening in most of the Asian markets. Indian markets extended their bull run on Monday, with shares hitting fresh 14.5 week highs in early trading as positive economic data from the US raised hopes the global economy will withstand the impact of Europe's debt crisis.
Globally, US stocks retreated from multi-year highs on Monday as Greece struggled for an agreement on spending cuts needed to ensure another round of rescue funds. Greece missed a deadline on enacting reforms necessary to receive a new bailout from the European Union and the International Monetary Fund. Selling pressure remained subdued, however, limiting the downside for the markets. Indian investors this week, meanwhile, would keenly watch out for the domestic industrial production growth for the month of December due to be released on Friday. Also, consumer comfort index of US which will be released on coming Thursday will be on radar.

Markets Today
The trend deciding level for the day is 17,711 / 5,360 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,826 – 17,945 / 5,392 – 5,422 levels. However, if NIFTY trades below 17,711 / 5,360 levels for the first half-an-hour of trade then it may correct up to  17,592 – 17,476 / 5,392 – 5,297 levels.

L&T bags order worth Rs.1,937cr
Larsen & Toubro's (L&T) construction arm has bagged a road project worth Rs.1,937cr from the GVK Group to widen a highway in Madhya Pradesh. The contract involves designing, engineering and construction for four-laning of a major portion of Shivpuri-Dewas section of NH-3 totaling 235km. The construction period is 27 months.
At the CMP of Rs.1,383, the stock is trading at PE of 19.5x FY2013E earnings, which is below the historical trading multiple for L&T. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in the different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,607, which provides 16.2% upside from current levels. Hence, we maintain our Buy view on the stock.

Upstream oil firms to bear higher subsidy
Media reports suggests that state-run upstream companies will share 38.0% of the revenue losses (under-recoveries) suffered by oil marketing companies (OMCs) due to selling fuels at discounted prices for the period April–December 2011. The upstream companies had shared 33.0% of under-recoveries during 1HFY2012. During April–December 2011, total under-recoveries of OMCs stood at Rs.97,300cr.
Thus, ONGC will have to bear subsidy burden of Rs.30,296cr for April–December 2011, which is expected to result in additional subsidy burden of Rs.12,536cr during 3QFY2012. We had pegged upstream companies share of under-recoveries at 38.0% for FY2012 and, thus, do not change our estimates. We maintain our Buy rating on ONGC with a target price of Rs.324.

3QFY2012 - Result Reviews
HUL
HUL posted a healthy set of numbers for the quarter, in-line with our estimates. The company’s top line grew by 16.4% yoy to Rs.5,853cr. Earnings for the quarter grew by 18% yoy, marginally above our estimate, to Rs.754cr. The company’s top line was driven by modest volume growth of 9% yoy. Overall, FMCG sales grew by 17% yoy, aided by 18% yoy growth in the home and personal care (HPC) and 13% yoy growth in foods businesses. During the quarter, the soaps and detergent (S&D) segment posted 21% yoy revenue growth, while its EBIT margin expanded by 573bp yoy to 13.5%. The packaged food business reported 13.5% yoy growth. The personal products segment grew by 14% yoy. At the operating level, OPM expanded by 271bp yoy to 15.1% for 3QFY2012. The company cut its ad spends and other expenses and negated the affect of gross margin pressure. We maintain our Neutral rating on the stock.
Nalco
Nalco reported disappointing 3QFY2012 results. The company’s net sales grew by 0.4% yoy to Rs.1,430cr (below our estimate of Rs.1,770cr). Raw-material costs as a percentage of net sales stood at 16.7% in 3QFY2012 compared to 8.4% in 3QFY2011. Further, power costs as a percentage of net sales stood at 39.7% compared to 31.1% in 3QFY2011. Hence, EBITDA decreased by massive 83.6% yoy to Rs.64cr and EBITDA margin contracted by 2,287bp yoy to 4.5%. Other income, however, grew by 46.4% yoy to Rs.131cr. Consequently, net profit decreased by 80.0% yoy to Rs.51cr (significantly below our estimate of Rs.224cr). We maintain our Neutral view on the stock.
GSK Consumer
For 4QCY2011, GSK Consumer reported a modest performance, which was below with our estimate on the revenue and earnings fronts. The company’s top line grew by 18.6% yoy to Rs.602cr (Rs.508cr). On the operating front, the company recorded a 127bp yoy decrease in its operating margin to 10.2%, primarily on account of higher ad spends and other expenditure. However, the fall in OPM was curbed by reducing the staff cost by 174bp yoy. Earnings for the quarter grew by 10.7% yoy to Rs.59cr (Rs.53cr) on account of higher other income. The stock is under review.
MOIL
MOIL’s 3QFY2012 results were slightly below our expectations. Net sales decreased 5.4% yoy to Rs.240cr (slightly below our estimate of Rs.248cr) which would be mainly on account of decrease in average realizations in our view. EBITDA decreased 11.1% yoy to Rs.109cr. EBITDA margin dipped 293bp yoy to 45.7% on account of slump in manganese ore prices. Other income stood flat yoy to Rs.50cr, while tax rate was higher at 33.2%, compared to 30.5% in 3QFY2011. Consequently, net profit decreased 11.9% yoy to Rs.102cr, slightly below our estimate of Rs.106cr. We maintain our Neutral view on the stock.
India Cements
For 3QFY2012, India Cements registered healthy 20.5% yoy growth in its top line to Rs.944cr on account of a substantial 16.2% yoy increase in cement realization to Rs.4,262/tonne and reasonable 6.9% yoy growth in dispatches to 2.18mn tones, as retail cement demand has picked up in South India, which is the company’s major market. Southern region posted demand growth of 3.3% yoy during the quarter. OPM rose by 443bp yoy to 20.9% due to better cement realization despite higher power and fuel and freight costs. Power and fuel cost per tonne increased by 7.4% yoy during the quarter on account on higher coal imports, costlier domestic coal and higher power tariffs in Andhra Pradesh. Freight costs per tonne were higher by 5.1% yoy on account of increased railway freight and higher price of petroleum products. The bottom line came at Rs.56cr, registering growth of 162.3% yoy. We maintain our Neutral view on the stock.
BGR Energy
BGR Energy (BGR) posted a mixed set of numbers for 3QFY2012. As expected, the company’s top line for the quarter stabilized on prior-year period’s high base; however, earnings exceeded estimates owing to better-than-expected show on the operating front. The company’s top line declined by 36.1% yoy to Rs.803.7cr (Rs.1,257cr), which was lower by 10.8% (below street) than our expectation of Rs.901.1cr. The downside in revenue mainly came from the construction and EPC segment, which declined by 38.8.% yoy to Rs.727.1cr (Rs.1,118cr). In contrast, the capital goods segment posted decent 19% yoy growth to Rs.75.2cr (Rs.63.2cr). On the EBITDA front, the company’s margin posted a positive surprise – EBITDAM  eported a sharp expansion of 463bp yoy to 16.3%, against our estimate of 12%. Margin was mainly aided by lower raw-material costs, which contracted by 730bp yoy to 73.1% as a proportion of revenue. Segment wise, the capital goods as well and construction and EPC segment offered upside to the margin, expanding more than ~400bp. As is the case since the past few quarters, we believe the construction and EPC segment would have been positively impacted by higher execution of BoP projects.
Interest cost during the quarter rose by 175% yoy/53% qoq to Rs.46.2cr, probably due to enhanced working capital debt, in our view. Led by slumped revenue, PAT declined by 37.5% yoy to Rs.54.7cr (Rs.87.6cr), however striking EBITDAM influenced the bottom line considerably – PAT came in 16% higher than our (below street) estimate of Rs.47.2cr.
Order backlog at the end of the quarter stood at Rs.8,000cr, largely aided by the Rs.1,700cr worth of order secured during the quarter. Notably, with 9MFY202 totaling mere ~Rs.2,300cr, we believe it will be challenging for the company to exceed Rs.4,000cr plus revenue target for FY2012 (management guidance). We would like to hear management’s commentary on the company’s future outlook and get more details over the quarterly numbers post which we will revise our estimates and recommendation. Currently, we remain Neutral on the stock.
Bajaj Electricals
Bajaj Electricals (BEL) posted top-line growth of 15.1% yoy to Rs.794cr (Rs.690cr) in 3QFY2012. The lighting segment registered strong 18.8% yoy growth to Rs.200cr (Rs.168cr) and the consumer durable segment registered a 24.7% yoy increase to Rs.414cr (Rs.332cr). The E&P segment registered a 5.1% yoy decline to Rs.179cr (Rs.190cr). EBITDA declined by 8.6% yoy to Rs.65cr (Rs.71cr), largely due to margin compression. EBITDA margin declined by 212bp yoy to 8.2% (10.3%), mainly due to higher other expenditure, which increased to 12.7% of net sales vs. 10.7% in 3QFY2011. PAT declined by 19.1% yoy to Rs.33cr (Rs.41cr), while margin declined by 175bp yoy to 4.1% (5.9%). We will be coming out with a detailed report post management interaction. We continue to maintain our Buy rating on the stock with a target price of Rs.201.
NCC
Nagarjuna Construction Company (NCC) posted a poor set of numbers for 3QFY2012, below our and street expectations. The company’s top line declined by 5.4% yoy to Rs.1,264cr, which was marginally above our expectation of Rs.1,215cr (Consensus: Rs.1,271cr). On the EBITDAM front, the company’s margin stood at shocking 6.1% (10.3%), registering a dip of 350bp yoy and lower than our estimate of 9.5% due to provisions (~Rs.15cr) and time and cost overruns in few projects. Interest cost came in at Rs.69.4cr, registering a yoy jump of 58.3% but a decline of 2.2% on a sequential basis. On the bottom-line front, NCC reported loss of Rs.9.5cr in 3QFY2012 vs. profit of Rs.40.5cr in 3QFY2011, against our estimate of PAT of Rs.14.0cr (Consensus: Rs.26.4cr), owing to decline in top-line and dismal margin performance. The current outstanding order book of NCC stands at Rs.21,990cr, with order inflow of Rs.9,943cr for 9MFY2012. Owing to the abysmal performance in the quarter and recent run-up in the stock price, we recommend Neutral on the stock.
GIPCL
GIPCL posted 26.9% yoy growth in its top line to Rs.391cr, driven by higher fuel costs as generation remained flat at 1,181MU. Vadodara stations I and II had PAF of 96.1% (93.7% in 3QFY2011) and 95.1% (100% in 3QFY2011), respectively. SLPP I and II stations operated at PAFs of 83.9% (89.2% in 3QFY2011) and 61.6% (60% in 3QFY2011), respectively. OPM for the quarter  stood at 24.1%, down 1,484bp on yoy basis due to higher gas prices. GIPCL’s 3QFY2012 bottom line fell by 30.6% yoy to Rs.17cr. We maintain our Buy rating on the stock, but the target price is under review.
SpiceJet
SpiceJet announced its 3QFY2012 numbers. The company’s net sales increased by 41.6% yoy to Rs.1176cr (Rs.830cr), on the back of fleet additions during the year. EBITDA declined by 117% yoy to negative Rs.19cr vs. positive Rs.114cr in 3QFY2011. EBITDA margin declined by 1,536bp yoy to negative 1.6% vs. positive 13.7% in 3QFY2011, mainly due to higher fuel costs, which increased to 50.4% of net sales vs. 37.5 in 3QFY2011. Consequently, PAT came in at negative Rs.39cr vs. profit of Rs.94cr in 3QFY2011. We will be coming out with a detailed report post management interaction. We continue to maintain our Neutral recommendation on the stock.
Siyaram Silk Mills
Siyaram Silk Mills announced its 3QFY2012 numbers. Net sales declined by 2.6% yoy to Rs.222cr (Rs.244cr). EBITDA declined by 2.0% yoy to Rs.29cr (Rs.30cr) due to lower revenue. EBITDA margin improved marginally by 9bp yoy to 13.2% (13.1%). PAT declined by 17.0% yoy to Rs.13cr (Rs.16cr), while margin declined by 103bp yoy to 5.9% (7.0%) largely due to higher depreciation and interest cost because of capacity expansion during the quarter. Depreciation increased by 18.1% yoy to Rs.6.3cr (Rs.5.4cr), while interest cost increased by 92.0% yoy to Rs.6.9cr (Rs.3.6cr). We will be coming out with a detailed report post management interaction. We continue to maintain our Buy view on the stock with a target price of Rs.426.

3QFY2012 - Result Previews
Mahindra and Mahindra
Mahindra and Mahindra (MM) is slated to announce its 3QFY2012 results. We expect the company’s top line to grow by robust 31.4% yoy to Rs.7,981cr, backed by impressive 24% yoy growth in total volumes. On the operating front, EBITDA margin is expected to witness a decline of 313bp yoy to 12% on account of increased purchases from manufacturing subsidiary MVML. As a result, the bottom line is expected to report a modest increase of 6% yoy to Rs.654cr. The stock rating is under review.
Cadila
Cadila Healthcare (Cadila) is expected to post yet another strong quarter with 12.6% yoy growth in its net sales to Rs.1,278cr on the back of robust growth on the domestic formulation and exports front. On the OPM front, we expect the company's OPM to dip by 160bp yoy to 21.3% on the back of favorable product mix. Cadila's net profit is expected to increase by 19.1% yoy to Rs.193cr, driven by top-line growth. We maintain our Buy rating on the stock with a target price of Rs.965.
ITNL
We expect IL&FS Transportation Networks (ITNL) to post a strong set of numbers for 3QFY2012 on account of higher number of projects in hand. The company’s revenue is expected to grow strongly by 78.0% yoy to Rs.1,306cr, led by underconstruction road BOT projects. We expect the company to register EBITDAM of 27.3%, down 279bp yoy, owing to higher contribution of the comparatively lowmargin E&C segment. Strong revenue growth is expected to reflect in the company’s earnings, which are expected to surge by 94.2% yoy to Rs.119.7cr. Owing to the recent sharp run-up in the stock price, we recommend an Accumulate view on the stock with a target price of Rs.227.
JK Lakshmi Cement
JK Lakshmi Cement is expected to announce its 3QFY2012 results today. We expect the company’s top-line to grow by 11.4% yoy to Rs.351cr on account of higher yoy realization. On operating front, margins are expected to improve by 550bp yoy to 13.4% aided by higher realization. The company’s net profit is expected to grow by 92% yoy to Rs.9cr (though on a lower base of last year). We recommend Neutral on the stock.

Economic and Political News
- Oil dips below US$114, Greek debt, Iran in focus
- India faces challenges on stable rating outlook, says S&P
- Upstream oil companies to bear 38% of subsidy share
- RBI marginally relaxes FX curbs for banks with big open positions

Corporate News
- LIC to pick 5% stake in Dena Bank
- Petronet in talks with Kerala government for power plant at Kochi
- PFC to raise Rs.40,000cr in FY2013
- SKS raises Rs.243cr via securitization

Open demat account in Angel Broking for online share trading in India