Company Reports Issued By BSE-Axis Expert View
Company Reports Issued By BSE-Axis Expert View
Please find below the Result Update on Tata Motors, Tata Global Beverages, Rural Electrification Corporation, PVR , Power Grid Corporation, NHPC, L&T Finance Holdings, Colgate-Palmolive, Coal India, Cipla and BHEL.
Tata Motors : Strong Q4 indicates what lies ahead! …
Reco : Buy Cmp : 304 Target : 381
Both standalone and JLR delivered better than expected revenue growth and EBIDTA margin (16.9% for JLR vs. 14.6% est and 2% for standalone vs.1.3% est).
IJLR benefited from better product mix (higher share of new models), regional mix, and favorable forex in Q4. This is in line with our thesis (refer our report – Hitting the right chord dated 13th May 2013) that JLR will continue to surprise on margin front.
Tata Global Beverages : Margin outlook remains muted …
Reco : Hold Cmp : 145 Target : 145
TGBL’s Q4FY13 performance was mixed with weak revenue momentum of 6% (vs. our estimate of 10%) but profit growth was healthy at 16% (vs. our estimate of 12%). The profitability was aided by improved operating performance in its major markets, cost saving initiatives and favorable impact of foreign exchange.
Rural Electrification Corporation : High RoE despite loan growth, NIM moderation …
Reco : Buy Cmp : 235 Target : 280
Q4 performance was impacted by sharp decline in yields (~60 bps QoQ) and higher provisioning. Yields were impacted due to (a) 25 bps reduction in lending rate, (b) interest rebate of ~Rs 300 mn in one account, and (c) lesser number of days in the quarter (Rs 800 mn impact). Higher provisioning was due to implementation of 0.25% standard asset provisioning.
PVR : Synergies with Cinemax to play out in FY14 …
Reco : Buy Cmp : 340 Target : 410
PVRL’s Q4FY13 performance was in line with our expectations. The company reported revenue ofRs~2.5bn, EBITDA of Rs165mn, and PAT ofRs117mn (consolidated numbers are not comparable YoY /QoQ due to the Cinemax acquisition during the quarter). The company recorded 55mn footfalls for FY13, which is impressive.
Power Grid Corporation : Equity dilution? Clarity likely by H2 …
Reco : Buy Cmp : 113 Target : 137
PGCIL’s Q4operating performance was weak(EBITDA of Rs 28 bn vs. estimate of Rs 30 bn) as bulk of the asset commissioning (~75% of Rs 78 bn) took place towards the end of quarter.Management maintained its guidance of asset commissioning and capex in FY14 at Rs 180-200 bn and Rs 200 bn respectively.
NHPC : Double-digit PAT growth in FY14; concerns priced in …
Reco : Buy Cmp : 19 Target : 23
NHPC is likely to see 11% growth in earnings in FY14 led by: (a) capacity addition of 937 MW, (b) full benefit of 1% additional RoE for storage-based plants (approved by CERC in Feb ’13), and (c) expectation of normal monsoons
(vs. below normal monsoon in FY12). In FY13, the company added only 275 MW of capacity vs. guidance of 1,164 MW. The delayed capacities are likely to get commissioned during FY14.
L&T Finance Holdings : Only piece missing is ‘Banking’ …
Reco : Hold Cmp : 79 Target : 77
LTFH is one of the front-runners for a new banking license. Banking license is a key target for LTFH as it would widen canvas of business opportunities along with a larger customer base .
RBI has recently released guidelines on new banking licenses and has invited applications to be sent by 1st July 2013.
Colgate-Palmolive : Weak Q4; P&G’s entry biggest challenge …
Reco : Sell Cmp : 1,473 Target : 1,110
Colgate disappointed yet again with 6% decline in earnings for Q4FY13 (vs. 14% growth expected) and just 10% earnings growth for FY13 (vs. 15% estimated) as margin (at 21%) continues to be under pressure since its mid-cycle peak of 24% in FY10. We expect entry of P&G in toothpaste (with Oral B) to put margin at further risk. Management too indicated its preparedness in increasing share of voice (SoV) to guard against potential market share erosion.
Coal India : Q4 in line; price hike drives EPS upgrade …
Reco : Buy Cmp : 327 Target : 434
Coal India’s recent price adjustment to drive ~5% increase in average realization of linkage coal.
The company has announced price increase of 9-11% for low grade coal and a price cut of 12% for high grade coal. The price adjustment is across subsidiaries except Western Coalfields (only 1% price hike as low grade coal prices for the subsidiary already at high levels).
Cipla : Q4 disappoints; FY14 outlook weak…
Reco : Hold Cmp : 402 Target : 436
Cipla’s Q4 PAT (Rs 2.7 bn; down 8% YoY) was below our (Rs 3 bn) and Street (Rs 3.3 bn) estimates. This was largely due to decline in India generic business (slowdown in market; branded business grew 11%) and API exports (delay in few tenders).
BHEL : Margin decline ahead…
Reco : Hold Cmp : 196 Target : 181
BHEL’s Q4FY13 performance was mixed – the company missed on revenue but surpassed our margin expectation. Management refrained from giving any guidance for revenue and margin, but indicated project execution pace in FY14 would be similar to FY13 or slightly better. Management also said power equipment market has bottomed out and will see improvement in ordering in FY14 with rising proportion of EPC orders. However, we remain cautious on revenue growth as 20% of BHEL’s order backlog is slow moving.
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