Asian Paints + Dabur Results Review

Asian Paints:ASPN is one of the best plays on domestic consumption demand in India and is firing on all cylinders – its domestic paints business is growing in excess of 20%, international business improvement is running ahead of management guidance. Potential duty cuts expected on raw material imports and price hikes are likely to drive margin expansion – management has indicated that a 1%-2% price hike is imminent.

ASPN’s domestic sales growth has been growing by 15%-25% over the last 8 quarters, demonstrating a strong improvement over the 10%-15% growth range earlier. Growth in the international business has also picked up, and margins have started to improve, driven by the Middle-East and South Asian markets. International business net margins are already in excess of 3%, ahead of management targets to achieve 3% in FY09E.

Dabur India:
Dabur 3QFY08 consolidated net profit growth of 19% was ahead of estimates; driven by a 14% sales growth. While flat EBITDA margins disappointed, sales growth was slightly ahead of estimates.

Foods and Consumer care division grew by 15%. In addition, consumer health business has shown improvement with growth increasing to 7%. Despite a 160bps reduction in raw material costs, margin were flat in 3QFY08 due to higher advertising and other expenses, mainly as other expenses were incurred for the H & B store rollout.

Dabur’s health & beauty stores are expected to start operations by March this year. Management has earmarked funds of Rs1.4bn over the next three years with a target RoE of 30-40%. Management is also working on expanding its skin care portfolio with some launches expected over the next 2-3 quarters.

Bank of Baroda + Yes Bank Q3 Result Review

Bank of BarodaBoB’s 3Q08 net profit is up 52% yoy, well ahead of expectations and likely driven by strong treasury and asset recovery gains. Qualitatively, the quarter appears fairly robust in terms of both P&L and balance sheet quality and growth. While margins are down a bit yoy and qoq, this was expected with no meaningful surprises.

BoB continues to grow loans rapidly, up 23% yoy and almost 6% qoq, and impressively continues to maintain asset quality. Deposits show fair momentum, 4% qoq growth, suggesting balanced balance sheet growth.

Yes Bank
Yes Bank’s profits were driven by stable and relatively high margins, continued growth in fees – especially in treasury and a reduction in costs. Yes Bank’s NIMs have remained largely stable at 290bps, helped by a stable interest rate and liquidity environment. Yes’ high pace of asset accretion (14% qoq), with stable margins, nil NPLs (especially commendable given its mid-market exposure) suggests strong management focus on quality.

Overall, it was a strong quarter with Yes consistently delivering revenues, growth and quality ahead of estimates, supported by a benign funding environment.

Thermax + Suzlon Result Analysis

Thermax:Thermax reported Q308 consolidated PAT of Rs797mn, up 51% YoY, ahead of our estimate of Rs703mn. This was driven by strong revenue growth of 57% YoY, higher than expected other income and lower-than-expected taxes.

Thermax reported Q3 consolidated revenues of Rs9.3bn, up 57% YoY and ahead of our estimates of Rs9bn. Energy segment revenues grew 62% YoY and environment business revenues grew 30% YoY. Thermax Q3 EBITDA margin of 11.7% was down 69bps YoY and below our estimate of 12.2% primarily on account of higher than expected material costs.

Thermax’s Q308 order backlog is Rs29.2bn, lower than the Rs32bn order backlog at the end of H108.

Suzlon Energy:
Suzlon had a disappointing quarter in our view with 3QFY08 PAT at Rs1.5bn down 13% YoY, which was 39% below CIR expectations of Rs2.5bn on the back of poor operating margins especially on the WTG side, higher depreciation and exceptionally high tax.

Suzlon took a hite of Rs 960 mn in Q3 FY08. However, an order backlog of Rs177bn, up 122% YoY, comprising Rs147bn of international orders. In MW terms Suzlon has a robust order backlog of 3,358MW comprising 2,917MW of international orders.

Deccan Chronicle + Jagran Prakashan Result Analysis

Deccan Chronicle Holdings: DCHL’s 3Q FY08 net profit was up 112%, driven by 48% sales growth and a 1,700bp margin expansion. Advertising revenues grew 46%, while circulation revenues grew 5%. The EBITDA margin of 65% was the strongest ever as DCHL continues to benefit from low raw material prices and an appreciating rupee.

DCHL has won the bid for the IPL’s 10-year Hyderabad franchise for US$107m. Management has indicated breakeven or a modest profit in FY08 for IPL, but our base-case estimates for sponsorship revenues call for a loss of Rs80m in FY08 and FY09.

Jagran Prakashan: Advertising revenue growth of 29% in 3QFY08 was driven by an increase in the advertising space on the back of new edition launches (I-Next and CityPlus) as well as ad-rates hikes undertaken last year.

Newly launched bilingual newspaper format I-Next, which now operates through 6 editions, has gained the number two position in the cities of Kanpur and Varanasi. Jagran’s 50:50 JV with Network18 is set to launch India’s first Hindi language business daily, which will be followed by other language business dailies.

1 2 3 20