Cadila + Glenmark Pharma – Dose for your Portfolio

Citigroup has reiterated OVERWEIGHT on Cadila Healthcare and Glenmark Pharmaceuticals with a BUY recommendation.

Cadila Healthcare:
Cadila continues to make progress in its effort to consolidate its position across key markets of US, Brazil, France & India. The adverse impact of generic competition for Protonix in the US on its JV with Nycomed is reflected in financials & valuations. Excluding a mark to market forex loss of Rs47m incurred in 4Q, FY08 results were in-line with expectations. Sales growth of 26%, EBIDTA margin expansion of 53bps & recurring (more…)

Subros meets expectations

For 4QFY2008, Subros Limited clocked 2.4% growth in Net Sales to Rs187.8cr, which was largely in line with our expectation of Rs188.1cr. Sales growth came on the back of volume growth of 7.6% while average realisations declined 4.8% yoy. Subros sold 1,43,717 AC units in 4QFY2008 as against 1,33,581 sold in 3QFY2008. The company’s Bottom-line, which increased 9.8% yoy to Rs8.9cr was also in line with our expectation of Rs8.7cr. Margins were however, marginally above our expectations primarily due to lower raw material costs.

During 4QFY2008, Subros witnessed a 115bp yoy increase in EBITDA Margins owing to lower Raw Material cost, which declined by almost 210bp yoy. Raw Material costs accounted for over 68.8% of Sales (70.9% in 4QFY2007). Subros reported a 9.8% jump in Net Profit wherein Net
Profit Margins improved by 30bp.

For FY2008, Subros clocked 2.4% growth in Net Sales to Rs662.7cr driven by around 8.3% yoy growth in volume while realisations declined by 5.4% yoy. Expect Subros to report an EPS of Rs 5.75 for FY2009.

Marico Ltd – Results Review

For 4QFY2008, Marico Limited posted a modest Topline growth of 17.8% yoy to Rs468cr (Rs397cr) on a consolidated basis in line with our expectation of an 18.6% growth to Rs471cr. However, this was the first quarter of below 20% Topline growth during the last eight quarters indicating the impact of high base. Healthy growth across its businesses including consumer products in India, international business and Kaya Skin Solutions, contributed to overall growth.

Marico’s Earnings for the quarter, on a consolidated basis, grew 45.1% yoy to Rs40.8cr (Rs28.1cr) on reported basis largely aided by a one-time gain of Rs10.6cr on account of sale of Sil brand to Scandic Food India Pvt Limited. At the Operating front, Marico delivered a disappointing performance registering a 35bp contraction in OPM to 9.7% (10.1%) resulting in a muted 13.6% yoy growth in EBITDA to Rs45.6cr (Rs40.1cr).

Allied Digital Services – India Focused

JP Morgan has reiterated Overweight rating on Allied Digital Services [ALDS] because of its focus on the booming IT Services market within India. For Q4FY08, Revenues grew 3% Q/Q with strong 40%+ Q/Q growth in the services segment offset by a ~10% decline in the solutions segment. EBITDA margins expanded 4% Q/Q with higher services contribution. However, lower other income and higher taxes led to net profit growth of just 2% Q/Q, still ahead of expectations. (more…)

Castrol – ABN Amro Overweight

Castrol’s 1Q08 net profit of Rs728m (up 76% yoy and 28% qoq) was 45% higher than expected, mainly due to higher sales and lower-than-expected costs.Castrol managed to show exceptional performance on volumes and realisations. It reduced its inventory and debtor days to 37 and 24, respectively (from 46 and 34 the previous year). At the same time it increased its creditors days, thus managing negative working capital with a cash balance of Rs27 per share. (more…)

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