Buy Torrent Pharmaceuticals For Target Rs.875Torrent Pharma’s (TRP’s) Q3FY13 result was above our estimates due to strong improvement in EBITDA margins. The top-line performance was in line with estimates as revenues from Brazil declined YoY, primarily impacted by unfavourable currency. However, with the revival in growth in domestic formulation business and strong growth in US and RoW markets, the company is expected to report strong
performance, going forward. At the current price, the stock trades at 14.1x FY13E and 11.4x FY14E earnings. Maintain ‘BUY’ with target price of Rs875.
* Top‐line growth was impacted by Brazilian operations: TRP’s revenue for the quarter reported muted growth of 14.5% YoY to Rs8bn, primarily impacted by lower growth in international formulation business. However, the domestic formulation business continues to revive with 14% YoY growth during the quarter. CRAMS business reported flat revenues YoY due to lower demand from its partner on account of loss in few tenders.
* Adjusted PAT grew by 35%: The company reported 33% YoY increase in EBITDA during the quarter to Rs1.6bn, while EBITDA margins expanded by 280bps YoY to 20.2% due to favourable product mix and operating leverage. PAT grew by 35% YoY to Rs1.12bn, in line with strong operational performance.
* Valuation and View: TRP’s earnings are likely to grow at 28% CAGR over FY12- 14, in line with strong operating performance. Its high return ratios are likely to sustain. We believe that the current valuations do not reflect the improvement in business profitability, the turnaround of international operations and TRP's strong positioning in the domestic formulations business. The stock trades at 14.1x FY13E and 11.4x FY14E current earnings estimates. We retain our ‘BUY’ recommendation, with target price of Rs875.
Buy Puravankara Projects Ltd For Target Rs.102.00SYNOPSIS
* Puravankara Projects Ltd is one of the leading real estate developers of the country response to the growing need for quality housing & commercial space in metropolitan cities of India.
* During the quarter, the robust growth of Net Profit is increased by 89.12% to Rs. 501.93 million.
* Sale value for the quarter was INR 2,346 million, representing an 18% increase versus INR 1,994 million in the quarter ended 30 September 2011.
* Purva Venezia won the award for ‘Mid-range Housing Project of the Year’ at the Bangalore Real Estate Awards 2012.
* Puravankara launched an ultra-luxury project, Purva Whitehall, at Sarjapura, off Outer Ring Road, Bengaluru in October 2012 and has sold
35% of the total inventory with sizes ranging between 1900-2500 sqft.
* For the first half of this fiscal year, the company recorded a 34% increase in consolidated revenue to INR 5220 million from INR 3890 million in H1FY12.
* Net Sales and PAT of the company are expected to grow at a CAGR of 29% and 26% over 2011 to 2014E respectively.
Investment Highlights
Results updates- Q2 FY13,
Puravankara Projects Ltd is a part of Purvankara Group is one of the leading real estate developers of the country response to the growing need for quality housing and commercial space in the metropolitan cities of India, reported its financial results for the quarter ended 30th Sep, 2012. The 2nd quarter witnesses a healthy increase in overall sales as well as profitability on account of demand for ready- tomove –in units and new Projects Developments.
The company’s net profit jumps to Rs.501.93 million against Rs.265.40 million in the corresponding quarter ending of previous year, an increase of 89.12%. Revenue for the quarter rose 37.91% to Rs.2730.25 millions from Rs.1979.80 millions, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.35 a share during the quarter, registering 89.12% increase over previous year period. Profit before interest, depreciation and tax is Rs.1232.07 millions as against Rs.466.50 millions in the corresponding period of the previous year.
Outlook and Conclusion
* At the current market price of Rs.89.90, the stock P/E ratio is at 9.83 x FY13E and 7.50 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.9.05 and Rs.11.85 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 29% and 26% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 5.95 x for FY13E and 5.00 x for FY14E.
* Price to Book Value of the stock is expected to be at 1.01 x and 0.89 x respectively for FY13E and FY14E.
The second quarter witnesses a healthy increase in overall sales as well as profitability on account of Sale of ready- to- move –in units and new Projects Execution. 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.102.00 for Medium to Long term investment.
Buy Yes Bank Ltd For Target Rs.589.00YES BANK, India’s new age private sector Bank, is a state-of-the-art high quality, customer-centric, service-driven Bank catering to the “Future Businesses of India”.
* Bank’s Capital Adequacy Ratio registered at 18.00% as on 31.12.12.
* CASA deposits grew by 74.9% y-o-y to Rs. 103408 mn taking the CASA ratio to 18.3% as at December 31, 2012 up from12.6% as of December 31, 2011.
* Net profit for Q3 FY13 was up 34.72% to Rs. 3423.10 mn as compared to Rs. 2540.90 mn for Q3FY12 driven primarily by sustained & diversified revenue growth.
* YES BANK added 12 branches across the country during the quarter, taking the total branch count to 412.
* Total Deposits grew by 20.2% to Rs. 564005 mn as at December 31, 2012 from Rs.469291 mn as at December 30, 2011.
* YES BANK has partnered with American Express to offer a credit card to retail and micro SME customers.
* Net Income and PAT of the company are expected to grow at a CAGR of 38% and 29% over 2011 to 2014E respectively.
Investment Highlights
Results updates- Q3 FY13,
The company’s net profit jumps to Rs. 3423.10 million as against Rs. 2540.90 million in the corresponding quarter ending of previous year, an increase of 34.72%. Revenue for the quarter rose 26.70% to Rs. 21336.40 million from Rs. 16840.60 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 9.57 a share during the quarter, registering 32.60% an increase over previous year period. Net Interest Income is Rs. 8975.10 millions as against Rs. 6390.10 millions in the corresponding period of the
previous year.
Outlook and Conclusion
According to the RBI's 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks', September 2011, Nationalized Banks, as a group, accounted for 52.2 per cent of the aggregate deposits, while State Bank of India (SBI) and its associates accounted for 21.8 per cent.
* At the current market price of Rs.526.00, the stock P/E ratio is at 11.44 x FY13E and 9.28 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 35.30 and Rs.43.55 respectively.
* Net Income and PAT of the company are expected to grow at a CAGR of 38% and 29% over 2011 to 2014E respectively.
* On the basis of Debt-Equity Ratio, the stock trades at 49.18 x for FY13E and 44.81 x for FY14E.
* Price to Book Value of the stock is expected to be at 2.43 x and 1.93 x for FY13E and FY14E respectively.
* We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs. 589.00 for Medium to Long term investment.
Buy ICICI Bank Ltd. For Target Rs.1204.00ICICI Bank Limited is India's largest private sector bank and the second largest bank in the country, with consolidated total assets of US$ 111 billion at June 30, 2012.
* Bank’s Capital Adequacy Ratio registered at 18.28% as on 30.09.12.
* Non-interest income increased by 17% to Rs. 20430 mn in Q2-2013 from Rs. 17400 mn in Q2-2012.
* During the quarter, savings account deposits increased by 15% year-on-year to Rs. 806180 mn (US$ 15.3 billion).
* The Bank has increased its ATM network to 10,006 ATMs at September 30, 2012 as compared to 6,913 at September 30, 2011.
* ICICI Bank has entered into MoU with Ecobank of Africa to increase interest from Indian corporate in Africa and the enhancement in Indo-African trade & investment opportunities.
* ICICI Bank announced a reduction in interest rates of retail fixed deposits by 0.50% for tenures ranging from 91 days to less than 5 years with effect from September 11, 2012.
* Net Income and PAT of the company are expected to grow at a CAGR of 22% and 20% over 2011 to 2014E respectively.
Outlook and Conclusion
* At the current market price of Rs.1085.00, the stock P/E ratio is at 15.85 x FY13E and 13.95 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 68.46 and Rs.77.77 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 20% over 2011 to 2014E respectively.
* On the basis of Debt Equity Ratio, the stock trades at 2.84 x for FY13E and 2.89 x for FY14E.
* Price to Book Value of the stock is expected to be at 1.83 x and 1.62 x for FY13E and FY14E respectively.
We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs. 1204.00 for Medium to Long term investment.
Buy Cholamandalam Investment & Finance For Target Rs.298Scaling new heights
Cholamandalam Investment & Finance Company (CIFC), a part of the southbased Murugappa Group, operates as a pure asset finance player (AFC) offering vehicle finance, home equity loans and business finance. It has a network of 484 branches across India with an AUM of Rs 15,631 cr as on September 2012. The company has built a scalable and sustainable business model with attractive NIMs, strong loan growth, control over asset quality and widespread reach.
Management aims to maintain growth but does not wish to compromise on the asset quality front for the sake of growth. Adopting a pro active approach management has avoided the gold loan portfolio considering lots of regulatory hurdles with RBI. Moreover, the company has been focusing more on the high yielding Used CVs and LCVs segment which will ensure that the company continues to witness the growth momentum going forward. With most of the branch network expansion in place, CIFC now intends to focus on improving the productivity of these branches which will lower the cost to income ratio.
We believe that the above initiatives with a revamped business model will lead 1to a sustainable and profitable growth in CIFC’s business. We expect earnings to grow at a CAGR of 46.7% over FY12-FY14E. We expect the company to report an improvement in its RoE from 14.0% in FY12 to 19.9% in FY14E and RoA (post tax) to improve from 1.5% in FY12 to 1.9% in FY14E. At CMP the stock is trading at 1.9x FY13E and 1.54x FY14E ABV and 11.08x FY13E and 8.22x FY14E EPS. Based on our estimated BV of Rs.149 per share for FY14E and P/ABV target multiple of 2.0x we arrive at a target price of Rs.298. We recommend BUY on the stock indicating a potential upside of 25.3%.
* CIFC is well positioned to deliver 30% CAGR growth in AUM over FY12-FY14E driven by the growth in vehicle finance segment. In the Vehicle Finance segment particularly the company’s strategy to target high growth business segments like Used CVs, less cyclical LCV segment and entering into new tractor financing will lead to sustainable growth going forward.
* We believe that CIFC will continue to maintain its growth momentum aided by the new products launched, increasing market share in high yielding segments and benefit of network expansion. We expect disbursements to witness a CAGR growth of 30.3% over FY12-FY14E.
* The significant branch expansion made by the company in the last 2-3 years will start yielding results and CIFC will witness improvement in overall productivity of the branches leading to lower cost to income ratio leading to improvement in the company’s bottom line. We expect C/I ratio to improve from 56.1% in FY12 to 51.5% in FY14E.
* CIFC has managed to reduce its gross NPA from historic high of 5.5% in FY10 resulting from its personal loan portfolio to nearly 0.8% in FY12 which suggest strong command of the management to keep a check on the rising concern over NPAs. Going forward although we expect NPA to slightly increase from current levels to 1.1% in FY13E it will still be well under control.
Buy NIIT Technologies For Target Rs.350NIIT Technologies (NIIT Tech) reported revenues/margin above PLe/Consensus expectation. However, on the margin front, it disappointed due to the weakness in GIS and insurance business. Improving revenue momentum in GIS, project ramp-up in Morris would give the much needed revenue impetus along with margin expansion in CY13. We retain our ‘BUY’ rating with target price of Rs350.
* Revenue growth steady, margin disappoints: NIIT Tech reported revenue growth of 2.9% QoQ to Rs5,144m (PLe: Rs5,126m, Cons: Rs5,035m) and 4.4% on constant currency basis. EBITDA margin contracted by 115bps to 15.8% (PLe: 16.5%, Cons: 16.1%), mainly due to softness in GIS, Insurance business and Transition costs associated with a large engagement. However, on account of increase in other income (revaluation of foreign currency assets & liabilities), PAT improved by 30% QoQ to Rs560m (PLe: Rs 592m, Cons: Rs545m).
* Recovery in GIS business and revenue, post transition, to give upside: The cost associated with large project from Morris-related transition has impacted margin by 40bps in the quarter. We expect revenue ramp-up in Q4FY13. GIS business delivered operating margin of -7% compared to traditionally ~20%+ due to cost over-run in a APDRP contract. The management expects margin to be recouped by Q1FY14, as Q4 is seasonally a strong quarter for GIS.
* Conference call highlights: 1) Margins declined significantly in GIS business in Q3FY13~(7)% (Q2FY13~1%, Q1FY13~15%) 2) Q3FY13 Revenue – Room: Rs337m, Morris: Rs303m, Projecta: Rs144m, GIS: Rs197m, CCTNS: Rs266m 3) Hedges:US$47.9m (@Rs56.71) 4) Sabre BPO revenue: ~Rs52m (margin: ~8-9%) 5) BFS vertical will continue to remain soft 6) Non-linear revenue: 21% 7) DSO: 76days
8) FCF for Q3FY13: ~Rs550m 9) Volume: US: 1%, Europe: 5.7% QoQ 10) Added four new clients, CCTNS pilot phase went live in the last week of December
* Valuation & Recommendation: NIIT Tech has made investments in the business and now is the time to reap. Positive IATA commentary, project ramp-up in GIS, and Morris ramp-up would give revenue growth with margin impetus. NIIT Tech is currently trading at 7.2x FY13 estimates with EPS CAGR of 13% (FY12-14E).
Buy HDFC Bank Limited For Target Rs.724.00The Housing Development Finance Corporation Ltd. (HDFC) was amongst the first to receive an ‘in principle’ approval from the RBI to set up a bank in the private sector.
Bank’s Capital Adequacy Ratio registered at 17.00% as on 31.12.12.
As of December 31, 2012, the Bank’s distribution network was at 2,776 branches and 10,490 ATMs in 1,568 cities as against 2,201 branches and 7,110 ATMs in 1,174 cities as of December 30, 2011.
The Bank’s total income for the quarter ended December 31, 2012, was Rs. 105065.00 mn as against Rs. 86226.00 mn for the quarter ended December 31, 2011.
Total deposits were at Rs. 2841190 mn, an increase of 22.2% over December 31, 2011. Savings deposits grew 16.5% to Rs. 819420 mn and current deposits grew 10.4% to Rs. 470040 mn.
Operating expenses for the quarter ended December 31, 2012, were Rs. 2,5741.00 mn, an increase of 19.3% over the corresponding
quarter of the previous year.
Net Income and PAT of the company are expected to grow at a CAGR of 27% and 28% over 2011 to 2014E respectively.
Outlook and Conclusion
According to the RBI's 'Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks', September 2011, Nationalised Banks, as a group, accounted for 52.2 per cent of the aggregate deposits, while State Bank of India (SBI) and its associates accounted for 21.8 per cent.
At the current market price of Rs.659.00, the stock P/E ratio is at 23.17 x FY13E and 19.11 x FY14E respectively.
Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 28.45 and Rs.34.48 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 27% and 28% over 2011 to 2014E respectively.
On the basis of Debt-Equity Ratio, the stock trades at 4.35 x for FY13E and 4.09 x for FY14E.
Price to Book Value of the stock is expected to be at 4.26 x and 3.48 x for FY13E and FY14E respectively.
We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs. 724 .00 for Medium to Long term investment.
Buy Kwality Dairy (India) Ltd For Target 38.00
Kwality Dairy (India) Ltd India's Premier Dairy Foods Company focuses on building leadership positions in branded and value added markets across the dairy sector.
During the Second quarter, the robust growth of Net Profit is increased by 65.72% to Rs.268.44 million.
Kwality taken franchise two new plants during the year are located in Amritsar in the state of Punjab and Ajmer in the State of Rajasthan.
Fitch Ratings has assigned Long-Term rating of Fitch BBB+ (ind)' with Stable Outlook & A2 as short term rating to KDIL's overall Working Capital facilities.
The company has strengthened brand “Dairy Best” with launch of new products in market viz, Paneer, Dahi and Milk in three variants
Kwality plans to have the Milk Products Processing Unit in Dubai to process various milk powders and dairy ingredients.
Net Sales and PAT of the company are expected to grow at a CAGR of 37% and 56% over 2011 to 2014E respectively.
Outlook and Conclusion
* At the current market price of Rs.33.00, the stock P/E ratio is at 4.92 x FY13E and 3.75 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.6.70 and Rs.8.80 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 37% and 56% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 5.71 x for FY13E and 4.72 x for FY14E.
* Price to Book Value of the stock is expected to be at 2.12 x and 1.36 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.38.00 for Medium to Long term investment.
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