Tata Power Vs Reliance Power

Tata Power reported net revenue of Rs19.6bn (up 45% YoY), primarily on the back of increasing fuel costs which are a complete pass through in the regulated business model. EBITDA was up 1% YoY at Rs2.7bn; however, EBITDA margins were under pressure this quarter declining by 584 bps YoY primarily due to an increase in cost of fuel (up 76% YoY). Other income (excluding Rs1.7mn on profit on sale of investment in F2Q09 vs Rs851mn in F2Q08 and forex gain of Rs767mn in F2Q09 vs Rs90 mn in F2Q08) was Rs1.1 bn (up 141% YoY). This was largely attributed by dividend income received from subsidiaries. (more…)

RCom vs Bharti Airtel

Reliance Communications and Bharti Airtel both reported their Q2 numbers and here is a brief comparison on the same.

RCom reported 2Q FY09 net profit at Rs15.3bn, up 17% YoY and flat QoQ; reported results were boosted by ~Rs919mn of one-time income from FLAG arbitration. Adjusting for this, RCom’s EBITDA margin fell ~250bps QoQ to 39.8%.

High debt levels (~70% of which is forex debt), possible pressure on EBITDA margins from network expansion and increasing competitive risks in the Indian telecom sector remain key risks in our view. The Co continues to capitalize (MTM) losses (~Rs23bn) on its forex exposure. (more…)

Aditya Birla Nuvo – Slower Growth Ahead

Aditya Birla Nuvo’s 2Q FY09 net loss stood at Rs1.05bn, vs loss of Rs283mn in 1Q 09. going forward in FY09, the company is expected to report a Loss.

Pending promoter warrants imply ~Rs34bn (~50% of standalone FY08 capital employed) of potential cash infusion for the Co. The warrants are live until Aug ’09 but we see low likelihood of subscription as the exercise price of Rs2007/sh is ~4-5x current sh. price. In the absence of promoter funding, we expect the capex & growth plans to be scaled back (partly factored into life-insurance assumptions).

ABNL has a 25% stake in Idea Cellular which yields to Rs 530 / share of ABNL pro-rated. ABNL’s financial services business is valued at an enterprise value of Rs686/sh (down 30% vs earlier SoP). Enterprise value of ABNL’s remaining businesses stands at Rs431/sh. Net Debt is at Rs 773 / share as we no longer expect the Birla Group management to subscribe to Warrants at 4 times the CMP.

NTPC – Can Growth Last ?

NTPC reported F2Q09 revenue of Rs94.5 bn (up 27% YoY) and earnings of Rs21 bn (up 10% YoY). Adjusted earnings in F2Q09 were Rs18.3 bn (up 12% YoY). The company commercialized 500 MW of Kahalgaon II during the quarter.

2QFY09 recurring PAT at Rs17.4bn (down 6% YoY) was in line with CIR estimates. Reported PAT was higher at Rs21.1bn (up 13% YoY) led by exceptional items. Earnings are under pressure due to Significant delays in incremental capacity additions and Marginal negative impact (2-3%) of new CERC draft regulations from FY10E onwards.

Glenmark Pharma

Glenmark’s 2Q PAT (Rs1.18bn) came in 5% ahead of MLe driven by strong 50% topline growth and stable 30%+ EBITDA margin. US generics business grew sharply by 117% whereas Latam and RoW markets growth is back on track. Revise core earnings estimates by 8-9% to reflect lower margins.

With 35 products in market, US generics business grew 117% YoY (Rs1.76bn) leading to overall generics business growth of 86%. Impact of new launches (out of 40 ANDAs pending approval) is likely to reflect in the next few qtrs. Latam and SRM markets bounced back after a weak 1Q and are expected to show strong growth going forward. Domestic business growth is robust at 17% (vs industry grwth of 11% and guidance of 15%). Milestone guidance maintained for FY09E.

Fully Diluted EPS is expected to be Rs 30 for FY09.

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