RBI Monetary Policy—Mid Quarter Policy- March 2013In the tough act of balancing between growth and Inflation, the Reserve Bank of India ruled in favour of growth as it moved on to cut the key policy rate in its Mid-Quarter Monetary Policy review. The Central Bank acknowledged the fact that the economic environment has been slowing and there is need to address the growth concerns, however any policy action remains constrained by the above comfort level of inflationary pressure persisting in the economy.
RBI, in its Mid quarter Policy review slashed the Repo rate, rate at which Banks borrow from RBI by 25 BPS to 7.5 percent from 7.75 percent. Consequently, the reverse repo rate- the rate at which RBI borrows from Banks, gets adjusted to a percentage point below the repo rate at 6.5 percent. The Marginal standing Facility (MSF) rate and the Bank rate now stand at 8.5 percent, being 100 basis points more than the repo rate. CRR- the portion of deposits that banks keep as reserves with the Central Bank, was not touched by the RBI this time and remains unchanged at 4%.
The 25 BPS repo cut was very much on anticipated lines and the RBI has given the growth case scenario, a benefit of doubt and would be closely monitoring the situation from here on. Overall, the policy statement has been relatively balanced and was more or less similar in stance with the Central Bank’s January Policy review. The RBI has been very specific in its approach and has emphasized on the fact that although the union budget has made a firm commitment towards fiscal consolidation and the economic growth momentum has been dismal, yet higher Inflationary pressure, especially the food inflation, creates limited scope for future rate cuts.
Buy Prestige Estates Projects Ltd For Target Rs.191.00We initiated coverage of Prestige Estates Projects Ltd and set a target price of Rs. 191.00 for Medium term investment.
* Prestige Estates Projects Ltd, a real estate development company, primarily engages in developing and leasing properties in the residential, commercial, hospitality, and retail sectors in India.
* During the quarter, the robust growth of Net Profit is increased by 227.93% to Rs. 920.50 million.
* The company’s net sales registered a 194.90% increase and stood at a record Rs. 4920.70 million from Rs. 1668.60 million over the corresponding quarter last year.
* Prestige Estates Projects Retail segment aims to complete the construction of all the on-going malls by 2015 and target an increase in lease rentals substantially by 2015 from this segment.
* Prestige Estates Projects Limited is planning to enhance its presence in Chennai and Kochi.
* Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 24% over 2011 to 2014E respectively.
Investment Highlights
Results updates- Q3 FY13,
Prestige Estates Projects Limited, a real estate development company, primarily engages in developing and leasing properties in the
residential, commercial, hospitality, and retail sectors in India, reported its financial results for the quarter ended 31st Dec, 2012.
The company’s net profit jump’s to Rs.920.50 million against Rs.280.70 million in the corresponding quarter ending of previous year, an increase of 227.93%. Revenue for the quarter stands up by 194.90% to Rs.4920.70 million from Rs.1668.60 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.2.81 a share during the quarter, registering at 227.93% increase over previous year period. Profit before interest, depreciation and tax is Rs.1619.00 millions as against Rs.630.20 millions in the
corresponding period of the previous year.
Outlook and Conclusion
* At the current market price of Rs.169.00, the stock P/E ratio is at 18.61 x FY13E and 14.29 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.9.08 and Rs.11.83 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 24% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 12.22 x for FY13E and 9.83 x for FY14E.
* Price to Book Value of the stock is expected to be at 2.29 x and 1.97 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. 191.00 for Medium to Long term investment.
Buy Time Technoplast Ltd For Target Rs.53Time Technoplast has received approval from Petroleum Explosives & Safety Organization "PESO" for marketing Composite Cylinders. The company becomes the first Indian company to receive such approval from the highest authority. Given the capacity of 3.0 lac cylinders, it is estimated that it can translate into revenue of ~ Rs 400 mn in FY14. Given the large addressable market size of 25 mn cylinders per year, the growth from this product can be substantial in the future.
We reiterate BUY on the stock with an unchanged price target of Rs 53.
Valuations and recommendation
We project earnings to grow 25% CAGR between FY12-FY14 as the company's manufacturing units get ramped up.
At CMP, TTL is trading at P/E of 8.2x and 6.4x FY13 and FY14 earnings respectively. We reiterate a BUY on the company with an unchanged DCF based target price of Rs 53.
Buy Bliss GVS Pharma Limited For Target Rs.34.00Bliss GVS Pharma Limited has the most modern plant to manufacture Female Contraceptives, Soft Pessaries and Suppositories.
* The company’s net sales registered a 28.42% increase and stood at a record Rs. 818.45 million from Rs. 637.32 million over the corresponding quarter last year.
* The company’s net profit registered a 6.04% increase and stood at a record Rs. 93.89 million from Rs. 88.54 million over the corresponding quarter last year.
* The Company has recommended Interim Dividend of 30% i.e. Re. 0.30 per Equity Share for the year 2012-13.
* The Company plans to set up local manufacturing units and Joint Venture and by relating its subsidiary to do better business.
* The company also plans to set up R&D lab to develop newer formulations and support Analytical Development.
* Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 25% over 2011 to 2014E respectively.
Investment Highlights
Results updates- Q3 FY13,
Bliss GVS Pharma Limited has the most modern plant to manufacture Female Contraceptives, Soft Pessaries and Suppositories, reported its financial results for the quarter ended 31 DEC, 2012 with a robust growth in Net Sales and Net Profit during the current quarter.
The company’s net profit jumps to Rs.93.89 million against Rs.88.54 million in the corresponding quarter ending of previous year, an increase of 6.04%. Revenue for the quarter rose 28.42% to Rs.818.45 million from Rs.637.32 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.0.91 a share during the quarter, registering 6.04% increase over previous year period. Profit before interest, depreciation and tax is Rs.274.63 millions as against Rs.167.72 millions in the corresponding period of the
previous year.
Outlook and Conclusion
* At the current market price of Rs.30.75, the stock P/E ratio is at 4.85 x FY13E and 4.03 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.6.34 and Rs.7.64 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 25% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 2.63 x for FY13E and 2.27 x for FY14E.
* Price to Book Value of the stock is expected to be at 1.15 x and 0.89 x respectively for FY13E and FY14E.
* We recommend ‘BUY’ in this particular scrip with a target price of Rs.34.00 for Medium to Long term investment.
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