Buy Oil and Natural Gas Corporation Ltd. (ONGC) For Target Rs.358ONGC reported Q3FY13 numbers better than street estimates. Net sales increased by 15.8% y-o-y and 6.1% q-o-q to Rs 209.87 bn (higher than street expectation of Rs 198.65 bn) led by higher crude oil sales volume and net realization. Net realization stood at USD47.97/bbl (up 6.69% y-o-y) v/s USD44.96 in Q3FY12 and USD46.8 in Q2FY13. In Rupee term net realization increased by 13.26% y-o-y to Rs 2597/bbl in
Q3FY13 due to Rupee depreciation against USD. During the quarter, oil subsidy burden of upstream companies stood at Rs. 150.82 bn (38.40% of total subsidy). ONGC shared subsidy burden was Rs. 124.33 bn in Q3 FY13 (82% of total up stream's share burden). EBITDA margin decreased 591 bps y-o-y (up 163 bps q-o-q) to 53.8% due to higher statutory levies. Net profit stood at Rs 55.62 bn (above street
expectation of Rs 53.28 bn) on account of higher than estimated top line. Though, Net profit decreased by 17.5% y-o-y and 5.7% q-o-q to Rs 55.62 bn, after adjusting the exceptional gain from the royalty payment by Cairn in Q3FY12 of Rs 31.42 bn company's net profit increased by 54.5% y-o-y. Crude oil sales grew by 7% y-o-y (up 3% q-o-q) to 5.64 MMT while natural gas sales remained flat y-o-y to 5.02 BCM.
Valuation
We are positive on ONGC from the long-term perspective due to likely rationalization of subsidy sharing and potential reserve accretion from its large E&P acreage. The recent reforms undertaken by the Indian government in pricing of petroleum products is also expected to be significantly value-accretive for ONGC. ONGC trades at a ~40% discount to its global peers on EV/BOE (7.2x EV/BOE of 1P reserves vs.
global average of above 12x). At CMP of Rs 308 ONGC is trading 10.58x FY13E and 9.57x FY14E EPS and 4.66x FY13E and 4.18x FY14E EV/EBITDA. We maintain our BUY rating on the stock with target price of Rs. 358.
Buy Pennar Industries Ltd.For Target Rs.31Moderate Quarter…
Pennar Industries has reported a moderate consolidated quarter due to lower demand in the auto, engineering, railways and infrastructure sectors for the steel products which includes steel strips and engineered profiles. We believe the scenario looks challenging in near term due to subdued performance by the heavy engineering segment and overall slower growth in the infrastructure in India though we draw comfort on the steady performance in PEBS. However, EV/EBITDA of 3.8x FY13E and 3.3x FY14E broadly factors the challenging scenario.
* Net Sales was flat YoY to Rs. 266.4 crore and up by 2.5% QoQ. The sales improved due to the growth in Tubes by 66% YoY, Industrial Components by 30.8% YoY and System Projects divisions by 17.4%.
* The Consolidated EBITDA fell by 17.5% YoY to Rs. 27.7 crore and was flattish QoQ basis. The EBIDTA margin fell by 210bps to 10.4% in Q3FY13 as against 12.5% in Q3FY12 and down by 30bps QoQ basis. This was primarily due to margin pressures in the Systems and Projects, Engineered Profiles and Cold Rolled Steel Strips businesses.
* The Adj PAT declined by 19.9% YoY to Rs. 10.8 crore and down by 3.5% QoQ.
* The PAT margin stood at 4.1% in Q3FY13 as against 5% in Q3FY12 and 4.3% in Q2FY13. Decline in tax rate supported the steep fall in profitability of the company. Tax rate stood at 30.9% in Q3FY13 as against 33% in Q3FY12 though tax rate was low at 24.8% in Q2FY13 as compared to Q3FY13. The fluctuation in tax rate is attributed to the tax benefit in PEBS for the period of five years which is valid till 2016.
PEBS, a subsidiary of Pennar Industries has reported a consistent performance, contributed to 25.4% of total consolidated Net Sales in Q3FY13 up from 22.8% in Q3FY12 and 24.1% in Q2FY13. The Net sale was Rs. 67.5 crore, up by 10.4% YoY and 7.9% QoQ. An EBITDA margin was 10.6%, down by 70bps YoY. The order book at PEBS currently stands at Rs. 235 crore. We are of the view that this segment has the capacity to outperform other segments though margins will remain under pressure due to the increase in competition from its peers.
Valuation & Recommendation
At CMP of Rs. 25, Pennar is trading at a P/E of 6.6x FY13E and 5.8x FY14E. The EV/EBITDA is 3.8x FY13E and 3.3x FY14E. The company has been able to maintain the top-line during the quarter but the pressure on operating margin continues, which is a matter of concern.
We have introduced FY14E estimates where we expect net revenue to grow by 8.6% to Rs. 1215.5 crore on account of benefit of capacity expansion in PEBS Gujarat from 60000MTPA to 90000MTPA and solar segment. We rollover our target multiple from FY13E to FY14E to a target of Rs. 31 per share (Rs. 29 per share), valued on an EV/EBITDA 4x FY14E and recommend BUY rating.
Buy Tata Power Co. Ltd. For Target Rs.125Tata Power reported a net loss of Rs.3.28 bn hit by Rs. 6 bn of impairment charges for Mundra project (due to change in the long-term Rupee/dollar exchange outlook). Further, lower realisation from coal business due to lower international prices, higher depreciation and interest cost also dragged down the bottom line. However, Adjusted PAT (excluding impairment cost) comes at Rs. 2.71 bn, in line with street
expectation of net profit Rs. 2.70 bn. Revenue for the quarter increased 36% y-o-y to Rs 90.39 bn vs. consensus of Rs. 80.16 bn helped by 64% y-o-y revenue growth in power business which is partially offset by 9% decline in revenue from coal business. Power revenue grew on the back of higher power sales (up 2% y-o-y to 3998 units), increase in tariff and higher revenue of TPDDL (Tata Power Delhi Distribution Ltd.) due to higher power purchase cost along with higher incentives due to lower aggregate technical and commercial(AT&C) losses. EBITDA margins improved 546 bps y-o-y to 20.5% due to lower fuel cost and other expenses. Company reported forex loss of Rs. 860 mn during the quarter vs. Rs 3.87 bn profit in Q3FY12.
Valuation
We believe that the Company’s massive power capacity addition and diversified business model will drive its growth going ahead. However, in near term higher fuel prices due to regulation on Indexation of Indonesian coal, tariff issue of UMPP and depreciation of Rupees will be key concern for the stock. In our view, valuations are already factoring all negatives and any positive on tariff issue on UMPP would be
key catalyst for the stock. At CMP Rs.97 the stock is trading at 1.76x FY13E BV. We maintain our Buy rating on the stock with target price of Rs. 125.
Buy TCPL Packaging Ltd for Target Rs.82.00TCPL Packaging Ltd is one of India's largest manufacturers of printed folding cartons, & is one of few listed packaging companies in India.
* During the third quarter ended the robust growth in the Net Profit of the company rose by 134.64% to Rs. 38.34 million.
* TCPL has signed technical collaboration agreement with AR packaging group, AB, Sweden.
* Revenue for the quarter of TCPL increased 21.92% to Rs.950.32 million from Rs.779.47 million, when compared with the prior year period.
* The Company has initiated steps to set-up acorrugating and finishing plant at Goa.
* TCPL is one of the largest exporters of printed cartons from India. Exports constitute about 17% of TCPL's annual revenues.
* Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 44% over 2011 to 2014E respectively.
Investment Highlights
Results updates- Q3 FY13,
The company’s net profit jumps to Rs.38.34 million against Rs.16.34 million in the corresponding quarter ending of previous year, an increase of 134.64%. Revenue for the quarter increase 21.92% to Rs.950.32 million fromRs.779.47 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.4.41 a share during the quarter, registering 134.64% increase over previous year period. Profit before interest, depreciation and tax is Rs.146.36 millions as against Rs.104.45 millions in the corresponding period of the previous year.
Outlook and Conclusion
* At the current market price of Rs.72.80, the stock P/E ratio is at 4.49 x FY13E and 3.37 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.16.21 and Rs.21.60 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 44% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 3.15 x for FY13E and 2.70 x for FY14E.
* Price to Book Value of the stock is expected to be at 0.79 x and 0.64 x respectively for FY13E and FY14E.
* We recommend ‘BUY’ in this particular scrip with a target price of Rs.82.00 for Medium to Long term investment.
Buy Bank Of Baroda For Target Rs.835BoB has underperformed the Sensex by ~15% in last 3 months on back of asset quality concerns. Although we are modeling higher credit costs for BoB in the present restructuring cycle, its asset quality has performed better than its peers during last couple of quarters. Even though the stark asset quality variance relative to its peers may not hold for the stock, we do not foresee its delinquency conversing to the industry mean levels. Hence, we upgrade BoB to BUY from ACCUMULATE earlier with the unchanged TP of Rs.835 based on 1.1x its FY14E ABV.
Valuation & recommendation
Although we are modeling higher credit costs for BoB in the present restructuring cycle, its asset quality has performed better than its peers during last couple of quarters We are maintaining the earnings estimate for BoB and expect its net income to grow at 6.4% CAGR during FY12-14E. The stock trades at reasonable valuations (1.0x FY14E ABV; RoE at ~18%) and hence, we upgrade BoB to BUY from ACCUMULATE earlier with the unchanged TP of Rs.835 based on 1.1x its FY14E ABV.
Sundaram Finance Ltd incorporated in 1954 has grown today into one of the most trusted financial services groups in India.
* Sundaram Finance has allotted 5,55,51,930 equity shares of Rs.10/- each fully paid-up as bonus shares to the equity shareholders of the Company in the proportion 1:1.
* During the quarter, the robust growth of Net Profit is increased by 24.70% to Rs. 1136.54 million.
* Sundaram Infotech Solutions, the subsidiary of Sundaram Finance, has signed an expanded deal with Easybookings, a Victoria - headquartered online ticketing and event management firm in Australia.
* Sundaram Infotech Solutions has bagged a multi-year Enterprise Software Solution deal from a leading several-decades-old Tokyo headquartered Japanese chemical manufacturing company.
* The Disbursements of the company for nine months ended 31st Dec 2012 increased 12% to Rs. 7400 crore compared to 6598 crore in
the same period last year.
* Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 22% over 2011 to 2014E respectively.
Investment Highlights
Results updates- Q3 FY13,
Sundaram Finance Ltd. incorporated in 1954 has grown today into one of the most trusted financial services groups in India, 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 of the company.
The company’s net profit jumps to Rs.1136.54 million against Rs.911.45 million in the corresponding quarter ending of previous year, an increase of 24.70%. Revenue for the quarter rose 23.28% to Rs.5474.85 million from Rs.4441.06 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.10.23 a share during the quarter, registering 37.65% decrease over previous year period, due to increase the equity capital of the company. Profit before interest, depreciation and tax is Rs.4727.16 millions as against Rs.3828.03 millions in the corresponding period of the previous year.
Outlook and Conclusion
* At the current market price of Rs.508.00, the stock P/E ratio is at 12.08 x FY13E and 9.96 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.39.73 and Rs.48.17 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 22% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 7.03 x for FY13E and 6.09 x for FY14E.
* Price to Book Value of the stock is expected to be at 2.33 x and 1.89 x respectively for FY13E and FY14E.
No comments:
Post a Comment