April, 2007 | Dalal Street

Cipla hammered on Poor Q4 Show

April 27, 20071 min read

Cipla reported 34% fall in net profit in Q4 March 2007 at Rs 126 crore from Rs 191 crore mainly due to a sharp decline in active pharmaceutical ingredients (APIs) exports and rising material costs. The company’s performance in the same quarter last year was exceptionally good because of strong sales in Western markets.

Net sales for the quarter were up 6.3% to Rs 938.5 crore, on the back of a 14.4% growth in domestic revenues to Rs 399.7 crore. Exports were flat at Rs 529.3 crore in the quarter ended 31 March 2007, from Rs 526.6 crore in the last year’s corresponding quarter. A change in product mix also contributed to the decrease in profitability.

Cipla today reported a 8% increase in net profit at Rs 660.82 crore for the year ended 31 March 2007, as compared to Rs 607.64 crore in FY 2006. Net sales were up at Rs 3572.1 crore compared to Rs 2985.9 crore in the year ended 31 March 2006.

Cipla expects its exports business to show modest growth in the next two quarters, on account of ever-rising pricing pressure in the US.

Breaking Corporate India Earnings News

Mahindra Gesco Tanks on Poor Show

April 27, 20071 min read

Mahindra Gesco Developers reported a net loss of Rs 1.52 crore for the fourth quarter ended March 2007 compared to a net profit of Rs 3.86 crore in the fourth quarter ended March 2006. Its net sales slipped to Rs 34 crore from Rs 42.4 crore in the previous year.

The stock had a pre-results’ rally. From Rs 594.30 on 19 April 2007, it shot up to Rs 675.50 by 25 April 2007, anticipating a strong set of results from the company. It is now quoting at Rs 615.

Mahindra Gesco is one of the larger players in the organised sector for property development and consulting. It plans to expand activities to all major cities in the country. Does this indicate a consolidation in Indian Real Estate ?

Economy, Markets and Macro Views

RIL Plays Havoc on BSE Sensex

April 27, 20071 min read

After sliding from late-February to early-March 2007, the Reliance Industries (RIL) stock had staged a solid rebound and the pre-results rally took the stock to a record high above Rs 1600, at Rs 1624.80, on Thursday (26 April).

The pre-results’ surge was mainly due to a huge build of positions in the stock in the derivatives segment. From Rs 1313.50 on 2 April 2007, the stock had risen 21.8% to a record closing high of Rs 1599.85 on Wednesday (25 April 2007). RIL is currently trading at Rs 1550 and the BSE Sensex down 250 points.

RIL reported a lacklustre 14% growth in net profit in Q4 March 2007 at Rs 2853 crore compared to Rs 2520 crore in Q4 March 2006, on the back of strong refining margins. Net sales rose mere 5.5% to Rs 25895 crore from Rs 24542 crore.

RIL posted a net profit of 10908 crore for FY 2007, compared with a net profit of Rs 9069 crore in FY 2006. Net sales rose to Rs 105363.30 crore from Rs 81211 crore. The company’s earnings per share (EPS) rose to Rs 78.3 in FY 2007 from Rs 65.10 in FY 2006.

RIL is targeting sales of more than $24 billion by 2011 from the retail business. The company has set up 135 retail stores in 16 cities during FY-2007, the company said on Thursday.

Equity Research

Clutch Auto – Outperformer ICICI Research

April 26, 20071 min read

ICICI in its research report released jus ta while ago has said that Clutch Auto will be an outperformer with a price target of Rs 260 [ 99%] appreciation from current levels.

Clutch Auto Ltd reported a splendid performance for the year ended March 31, 2007 (FY07), exceeding our estimates. Net sales surged 56.8% to Rs 235.5 crore against Rs 150.2 crore in FY06. This was much above our estimate of Rs 214.2 crore. Though contribution from exports were below from our estimates of Rs 97.5 crore, the 81.3% surge in domestic revenues more than made up for the shortfall.

At the current price of Rs 130, the stock trades at 5.1x its FY08E EPS. The stock underperformed the BSE Sensex mainly due to the company’s poor performance on the export front. The margin pressure would continue and this is the major cause of concern. However, ICICI continues to remain bullish on the company. Read the entire report here.

Economy, Markets and Macro Views

Eicher Motors advances on US Acquisition

April 26, 20071 min read

Eicher Motors has paid a total consideration of $ 3.5 million to acquire 100% equity from the shareholders of Hoff and Associates. Hoff & Associates had reported a consolidated turnover of $ 5.2 million for the year ended 31 December 2006.

Eicher Motors recently forayed into heavy commercial vehicles (HCVs) about three years back. Demand in this segment has increased due to a Supreme Court ban on overloading of trucks.

Eicher Motors also launched tipper, Terra 16, which was well received by the market. The company claims that the product is extremely suitable for mining, construction and other off-road applications. Eicher Motors has the best CNG technology in the world.

Besides commercial vehicles, Eicher Motors is also into auto components and engineering services. The auto components business mainly manufactures gears. In July 2006, Eicher Motors acquired a Detroit-based engineering services provider, Design Intent Engineering, for $2.5 million. The acquired firm brings expertise in surface design engineering, and design software for Eicher Motors.

Eicher Motors for the quarter ended December 2006 reported 26.50% rise in net sales to Rs 493.82 crore and a net profit of Rs 17.79 crore.

Reliance Mutual Fund has acquired 7% stake in Eicher motors.

Breaking Corporate India Earnings News

Tata Tea boils on buzz of Coke’s interest in Glaceau

April 25, 20071 min read

Tata Tea had bought 30% stake in Glaceau for $677 million in August 2006. Tata Tea had valued Glaceau at $2.2 billion.

Quoting sources, Beverage Digest said negotiations are going on and that some points of the deal still needed resolving. The newsletter also said sources suggested that Coke may want to announce the deal when its North American bottlers meet in Atlanta next month, or right before. The valuation of Glaceau is rumoured at $3 billion, up from a mere $2.2 billion just 8 months ago.

Coke is now focusing on non-carbonated beverages.

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