13/2/2013

Buy Cholamandalam Investment & Finance Company Ltd For Target Rs.181.00


The group set up Cholamandalam Investment and Finance Company Ltd (CIFCL) with an objective of offering asset finance through
leasing and hire purchase to corporate & then to retail customers. It has since evolved itself into a large, composite financial service
organization.
* CIFCL has approved raising of Tier I capital up to Rs.300 crores by an issue of Securities, through private placement including by way of
a ‘Qualified Institutions Placement’.
* CIFCL has demonstrated the results during the quarter; its boisterous growth of Net Profit is steers by 100.96% to Rs. 815.10 million.
* CIFCL has declared an interim dividend of 25% being Rs 2.50 per share on the equity shares of the Company for the FY 2012-13.
* The aggregate disbursements of the Company for the quarter are Rs.3114 Cr. as against Rs.2283 Cr. in Q3 FY12 registering a growth of
36%.
* The Company has expanded its presence to 506 branches as on 31stDecember 2012 & the additional branches are in Tier III and Tier IV
locations across India.
* Net Sales and PAT of the company are expected to grow at a CAGR of 39% and 78% over 2011 to 2014E respectively.
Investment Highlights
Results updates- Q3 FY13,
The Company that commenced business as an equipment financing company has now emerged as a comprehensive financial services solution provider that offers vehicle finance, business finance, home equity loans, stock broking and distribution of financial products to its customers, reported its financial results for the quarter ended 31st Dec, 2012. The third quarter witnesses a healthy increase in overall sales as well as profitability on account of increasing branch networks across the India.
The company’s net profit jumps to Rs. 815.10 million against Rs. 405.60 million in the corresponding quarter ending of previous year, an increase of 100.96%. Revenue for the quarter rose by 40.65% to Rs.6689.70 million from Rs.4756.20 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.6.15 a share during the quarter, registering at 80.85% increase over previous year period. EBITDA is Rs. 5013.90 millions as against Rs.3446.00 millions in the corresponding period of the previous year.
Outlook and Conclusion
*  At the current market price of Rs.272.00, the stock P/E ratio is at 10.89 x FY13E and 7.57 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.24.99 and Rs.35.93 respectively.
*  Net Sales and PAT of the company are expected to grow at a CAGR of 39% and 78% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 6.47 x for FY13E and 5.26 x for FY14E.
* Price to Book Value of the stock is expected to be at 2.08 x and 1.63 x respectively for FY13E and FY14E.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.307.00 for Medium to Long term investment.
  Buy Time Technoplast Ltd. For Target Rs.53


Outlook on revenue growth is positive as recently commissioned overseas plants get ramped up.
*  EBITDA margins expected to remain stable. Main feedstock (HDPE) price has been trading in a narrow range. Moreover, there is a mechanism in place to compensate for price fluctuation.
*  Company can generate revenue of Rs.28-29 bn from existing capacity. Going ahead, capex to moderate and would be largely confined to maintenance related work. This should boost free cash generation.
*  We reiterate BUY on the stock with a revised price target of Rs 53 (Rs 55 earlier)
Valuations and recommendation: Maintain Accumulate on account
of sluggish near-term earnings growth
* We project earnings to grow 27% CAGR between FY12-FY14 as the company's manufacturing units get ramped up.
* At CMP, TTL is trading at P/E of 8.7x and 6.6x FY13 and FY14 earnings respectively.
* We reiterate a BUY on the company with a DCF based target price of Rs 53 (Rs 55 earlier).
  Buy Dabur India Ltd. For Target Rs.151.00

CompanyOverview:
Dabur India Ltd is one of  the  leading FMCG  Companies in India. The  company  is  also  a  world leader  in  Ayurveda with a  portfolio of over 250 Herbal/Ayurvedic products. They operate in key consumer products categories like Hair Care, Oral Care, Health Care, Skin Care, Home Care and Foods.
 
InvestmentRationale:
Thrust on improvement in rural distribution network
Dabur is focusing on increasing its rural distribution reach, as rural penetration for FMCG product is still lower as compared to urban penetration. Low penetration level in Indian rural FMCG market offers room for FMCG's companies to grow across consumption categories.
Well diversified product portfolio
Dabur has well diversified product portfolio with a strong presence in FMCG products and has key brands in hair care, oral care, ayurvedic tonics, digestives, fruit juices, honey, glucose, skin care, air freshener in all of these categories. This diversification across product categories helps the company to minimize the risk arising due to competition.
Strong result driven by growth across all product lines
Dabur has shown strong result in Q1 of FY13, Net sales was up by 20.12% i.e. Rs.1012.66 cr as compared to Rs. 843.01 cr in same period year ago. This strong growth in revenue was driven by robust performance across all product categories Health Supplements grew by 18%, Digestives grew by 10%, OTC & Ethicals portfolio increased by 13%, Hair Oils increased by 8%, Canteen store department (CSD) contribute 6%, Shampoos was up by 23%,  Home Care was up by 14%, Skin Care  grew by 13%,  Oral  Care  reported  growth of 8%, Foods grew by 35%. Profit after tax was Rs. 118.92 cr in Q1 FY13 as compared to Rs. 91.1 cr in Q1 FY12 whichwas up by 30.54%. Profit marginswere also stable.
Thus, we recommend BUY on the stock for Medium Term with the Target of Rs. 151.

 Buy R S Software India Ltd For Target Rs.191.00


R S Software India Ltd is engaged with the world’s largest payment card association/ network & working for leading payment processor in US & UK.
* During the first quarter ended the robust growth in the Net Profit of the company and it is rose by 50.48% to Rs. 94.80 million.
* CARE has upgraded RS Software's credit rating from CARE A- to CARE A for shortterm facilities.
* The company allotted 15,50,000 Convertible Warrants on preferential basis to the Promoter @ Rs.51.86 per warrant to be converted into equity shares @ 10/- each at the ratio of 1:1, 3, 90,000 convertible warrants were converted into equity shares.
* R S Software has added 2 clients around long-term contracts with Y-O-Y price escalation clause.
* Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 27% over 2011 to 2014E respectively.

Outlook and Conclusion
* At the current market price of Rs.169.00, the stock P/E ratio is at 5.33 x FY13E and 4.26 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.31.69 and Rs.39.68 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 26% and 27% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 1.82 x for FY13E and 1.42 x for FY14E.
* Price to Book Value of the stock is expected to be at 1.56 x and 1.14 x respectively for FY13E and FY14E.
We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.191.00 for Medium to Long term investment.
  Buy IL&FS Trans For Upper Target Of Rs.235-240 & Rs.275 


Company Profile:
IL&FS Transportation Networks Ltd. engages in the development, implementation, operation, and maintenance of surface transport  infrastructure projects in India and internationally. It constructs and operates national and state highways, roads, flyovers, and bridges, as  well as metro rail, bus transportation, and border entry points. The company’s services include advisory and management services,  supervisory services, operation and maintenance services, and toll collection services for toll road projects. It also offers assistance to  applicants for toll road concessions with the bidding process.
The company was formerly known as Consolidated Transportation Networks  Ltd. and changed its name to IL&FS Transportation Networks Ltd. in October 2005. It was incorporated in 2000 and is based in Mumbai. It’s  a subsidiary of Infrastructure Leasing & Financial Services Ltd. Equity & Share Holding Pattern: It has an equity base of Rs.194.27 cr. that is  supported by reserves of around Rs.2569.52 cr., which is 13.22 times its equity. It has a share book value of Rs.100.06. The promoter  holding in IL&FS TRANS limited is 72.46% while FII holds 3.18%, DII holds 3.33% and investing public holds 21.03% stake in the company.
Share Profile:
Its shares with a face value of Rs.10 are listed on the NSE and BSE under the B group. Its share price touched a 52 week high/low of  Rs.224.30\143.10. At its current market price of Rs.199, the company has a market capitalization of Rs.3873crore.
Financial Performance:
Net profit of IL&FS TRANS decline 12.75% to Rs.117.38crore in the quarter ended September 2012 as against Rs.132.35crore during the  previous quarter ended September 2011. Total turnover rose 9.14% to Rs.1370.41crore in the quarter ended September 2012 as against  Rs.1255.53crore during the previous quarter ended September 2011. In the H1FY13, the company has reported net profit of Rs.251.18crore  against Rs.250.83crore in previous corresponding year. Total sales reported to Rs.2949.97crore in the H1FY13 as against Rs.2348.65crore  during the H1FY12. The company reported EPS of Rs.6.04 for Q2FY13 while for H1FY13 it has reported EPS of Rs.12.93.



Future outlook & Conclusion:
At its current market price of Rs.199, the share price discounts less than 7.5 times its FY2013 EPS (E) of Rs.28.36. in the light of its highly  encouraging performance in last three year, bright prospects going ahead, the shares of IL&FS TRANS is likely to provide steady growth to  the portfolio. Therefore we recommend a buy in the stock of IL&FS TRANS from a short to long term perspective with stop loss of 179 levels  for the target of Rs.235-240 & 275+….

 Buy On Decline Ajanta Pharma Ltd. For Target Rs.669


Results better than expectations
Ajanta Pharma posted better than expected results with 40% growth in sales. EBITDA margins also improved to 26.1% in Q3FY13 from 23.2% in Q2FY13 and 24.4% in Q3FY12.
Key Highlights
* Sales grew by 39.7% YoY mainly on account of volume growth and aided by weakening rupee
* Exports contribution for the quarter was higher at 67% (as against 65% in Q2FY13) due to higher contribution from WHO’s anti-malarial program.
* EBITDA margin rose significantly to 26.1% led by operating leverage and lower cost of materials
* PAT grew by 76% yoy and 49% qoq. PAT margins rose by 293 bps yoy and 246 bps qoq.
* For full year management is guiding for 30% growth with around 22% EBITDA margins
* The company has recently received marketing authorization in UK for Sildenafil tablets (better known as Viagra) for 50mg and 100 mg. Company expects to launch the same in UK post patent expiration in June 2013.
* Company has filed two more ANDAs with USFDA taking the total number of pending approval to nine and total filings to 11. Company intends to file ~ three more ANDAs in Q4FY13 meeting it annual target of 5-6 ANDAs per year.
Valuation & Recommendation
The stock has surpassed our target price of Rs 441. Considering the continuous outperformance, healthy outlook and recent re-rating we have given a higher multiple of 12x to the stock. Based on our FY14E EPS of Rs 55.7 and multiple of 12x, target price comes to Rs 669, a potential upside of 24%. Hence, we recommend to ‘BUY on Decline’.