4QFY09 Results by Sector - A Positive Surprise
Tuesday, April 28, 2009
Indian Industry beat Street Expectations in 4QFY09 Results. It's still early days in India's earnings season, but the first trends suggest earnings are in-line with modest expectations +2.3% vs. 3.3% est. for the Sensex (10/30).
So far, Banks, Capital Goods, Household Consumer Products, Metals and Telecom have beat expectations. Auto & Components, Retailing and Utilities have been the laggards.
Margins are up almost 130bps yoy and qoq, and meaningfully ahead of expectations suggesting fairly obvious commodity and input price gains, but most likely pretty effective cost management by businesses still early days, but this is fairly impressive stuff.
A wider sample of 100 companies (BSE500) suggests a more positive bias. Profits are up 6%yoy and 12%qoq while sales growth is flat sequentially. Pertinently, over 2/3Q09, the wider set was consistently weaker than narrow Sensex companies, possibly suggesting greater stress at the top end than the broader market? Let's wait for more of the earnings season.
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Published by Webmaster @ 8:40 AM IST.
Punj Lloyd - SABIC Ruling a Negative
Tuesday, April 21, 2009
Simon Carves, Punj Lloyds's UK subsidiary, has received a decision in adjudication proceedings initiated on 22 December 2008, regarding the termination, by SABIC UK Petrochemicals, of a contract originally awarded in 2006. The adjudication decision has been received and is in favour of SABIC. Simon Carves is disappointed with the initial decision, the company will now proceed to the next stage of dispute resolution.
Rs2.1bn of auditor qualifications have already been written off but Rs2.2bn of performance guarantees encashed have been classified as recoverable from clients. At this point we do not know if Punj Lloyd will write this off in 4QFY09/FY10, or continue to maintain the same in its books. We had already written off both these amounts as exceptionals in our FY09E numbers.
Expect Punj Lloyd to report sales of Rs30bn (up 28% YoY) and Recurring PAT of Rs1.36bn (up 16% YoY) in 4QFY09E. FY10 and FY11 EPS are epxtec to be flat at Rs 12.
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Published by Webmaster @ 11:41 AM IST.
Historical Bear Market Rallies in India
Monday, April 20, 2009
We would like to present to our readers Historical Bear market Rallies in India starting from the Harshad Mehta Securities Scam to Global Economic Crisis. The current rally from March 9th is the steepest with 38% rise until the 15th of April.
Historical Bear Market Rallies in Indian Stocks:
Revised Earnings Estimate for SENSEX now stands at Rs 847 and the Sensex is already trading at a P/E of 13. Analyss expect Markets could trough again after this severe rise during, or immediate after elections when the labour-pains of actual Govt formation kick in.
It is better to buy at a more Considered juncture during such a trough, despite
continuing global liquidity flows. While a possible rate cut & good monsoon forecast may smoothen the market dip up to the elections, valuations do not offer great risk/ reward at this point.
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Published by Webmaster @ 9:46 AM IST.
India Sugar cycle getting sweeter - Merrill
Wednesday, April 08, 2009
The sugar price in India could jump 20% in next six months and remain strong for next three years, in our opinion. Key drivers for such a strong up-cycle are - very low production in current season and forth coming season compared to consumption and lack of scope for further reduction in dealer stock level. Increased cost of production as well as cost of imports.
Expect sugar production in the current and next season starting Oct-09 to fall short of demand by 35% and 16% respectively due to cost pressures. Such a shortfall is likely to drive up the sugar price by another 20%, on top of the 54% rise seen so far since Aug-07 trough.
Hence, upgrade Balrampur (leveraged play on sugar price) to Buy. Maintain Buy on Renuka (higher PO) and Triveni. Maintaining Underperform on Bajaj Hindusthan due to high debt and forex loan loss.
Balrampur Chini Mills:
Key drivers of rating change are high leverage to sugar price to result in strong earnings growth, extended period of growth phase to bring in huge benefit of loan reduction and attractive valuation as stock 4.8x FY10E EV/EBITDA and 77x FY10E PE while we expect ROE to rise from 10% in FY08 to 16% in FY10E. Price Target of Rs76 is based on 6x FY10E EV/EBITDA.
Shree Renuka Sugars:
Renuka as the biggest raw sugar refinery of India would be the biggest beneficiary of sharp cane sugar production fall in India as the requirement and profitability of processing imported raw sugar has improved. Raising Price Target by 41% to Rs120/sh on the back of 7% upgrade to earnings driven by 1-7% higher sugar price in FY10-11E. We have also rolled over in PO basis to 6x FY10E EV/EBITDA.
Triveni Engineering & Industries:
Merrill maintains a Buy with a price target of Rs52 on attractive valuation and despite lower leverage to sugar business.
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Published by Webmaster @ 2:34 PM IST.
