The Basis of Allotment of Future Capital Holdings IPO is as below.
Month: January 2008
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 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’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 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.
Why Subsidiary + SOTP Valuation is Bad ?
In our post on how Analysts are Desperate to justify Stock price, we had written about number of stupid theories. Here is another one from an Analyst tracking the Retail Market in India and it is on Pantaloon Retail India Ltd. (more…)