BIG BOSS HITLAR
VIKAS PARSHURAM SAMWATSARE
Buy Maruti Suzuki India Ltd For Target Rs.2,130
Maruti Suzuki (Maruti) reported a weak operating performance for Q4FY2014 as higher input cost, dealer compensation for excise duty reduction (Rs143 crore) and employee benefit provisioning (Rs93 crore) affected the margins during the quarter. The net profit declined by 35.5% YoY to Rs800 crore, which was lower than our estimate.
* The volumes were weak in FY2014, given poor customer sentiment, and the Indian automobile industry reported a 6.8% decline in volumes for the fiscal. Discounts in the system remain at elevated levels and manufacturers are hesitant to take price hikes. Despite the excise duty cut, the volumes for Maruti are expected to remain weak as potential buyers defer purchases. The sentiment is expected to improve post-general election as economic activity picks up. A deficient monsoon remains an overhang as Maruti has substantially increased presence in rural India.
* The stock is trading at 14.5x FY2016E earnings and offers a 10% upside from the current levels. We maintain a Buy recommendation on the stock with an unchanged price target of Rs2,130.
Valuations
In view of the raw material cost pressures witnessed during the quarter and the management’s hesitation in taking price hikes in the face of weak customer sentiment, we have reduced our earnings estimates for FY2015 and FY2016 by 8% and 5% respectively. The stock is trading at 14.5x the revised FY2016 earnings estimate of Rs135.1 and offers a 9% upside from the current levels. We reiterate a Buy recommendation on the stock with an unchanged price target of Rs2,130.
Buy Wipro Ltd For Target Rs.638
Wipro Ltd. is a leading Information Technology, Consulting & Outsourcing Company that delivers solutions to enable its clients.
• Wipro has posted a net profit after taxes, minority interest and share of profit of associates of Rs. 22265 mn for the quarter ended March 31, 2014 as compared to Rs. 17287 mn for the quarter ended March 31, 2013.
• Total Income has increased from Rs. 99208 mn for the quarter ended March 31, 2013 to Rs. 120995 mn for the quarter ended March 31, 2014.
• Profit before interest, depreciation and tax is Rs. 32649.00 mn as against Rs. 22635.00 mn in the corresponding period of the previous year.
• Wipro added 59 new customers for the quarter in IT Services segment.
• Wipro has recommended declaration of a final dividend of Rs. 5 per equity share of par value of Rs. 2/- each.
• Wipro has won a five-year infrastructure managed services contract with a Fortune 500 global leader in specialty chemicals.
• Wipro has won a seven-year engagement with Xoserve, an organization which is an integral part of the restructured gas distribution market in Britain. • A large global bank has selected Wipro as a strategic partner to provide quality assurance and automation services.
• Wipro has won a large deal in the Basel II Risk & Compliance domain from a large state owned bank in India.
Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 17% over 2013 to 2016E respectively.
QUARTERLY HIGHLIGHTS (CONSOLIDATED)
Results Updates- Q4 FY14,
The company’s net profit jumps to Rs. 22265.00 million against Rs. 17287.00 million in the corresponding quarter ending of previous year, an increase of 28.80%. Revenue for the quarter rose by 21.75% to Rs. 117036.00 million from Rs. 96131.00 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 9.03 a share during the quarter, registering 28.64% increase over previous year period. Profit before interest, depreciation and tax is Rs. 32649.00 million as against Rs. 22635.00 million in the corresponding period of the previous year.
OUTLOOK AND CONCLUSION
* At the current market price of Rs. 585.55, the stock P/E ratio is at 16.32 x FY15E and 14.81 x FY16E respectively.
* Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.35.88 and Rs.39.55 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 17% over 2013 to 2016E respectively.
* On the basis of EV/EBITDA, the stock trades at 11.08 x for FY15E and 10.09 x for FY16E.
* Price to Book Value of the stock is expected to be at 3.51 x and 3.03 x respectively for FY15E and FY16E.
* We recommend ‘BUY’ in this particular scrip with a target price of Rs.638.00 for Medium to
Buy Finolex Cables Ltd For Target Rs.165
FCL is a leading cables player in India with more than 10% market share and enjoys a strong brand recall and sound financial health..
* However, in the past financials suffered with forex derivative exposure (during FY08-13); incurred cumulative loss of ~Rs300 crore
* Consequently, valuation de-rated significantly from average 15x in prederivative era to 3-8x during FY08-13
New beginning post-derivative hangover
* After an unpleasant experience with its derivative exposure, the management took corrective measures
* Nil exposure to derivatives at the end of FY13 and is intent to avoid in future
* Hence, this would be a new beginning with the valuation capturing the true potential of its business and financials
VIKAS PARSHURAM SAMWATSARE
Buy Maruti Suzuki India Ltd For Target Rs.2,130Maruti Suzuki (Maruti) reported a weak operating performance for Q4FY2014 as higher input cost, dealer compensation for excise duty reduction (Rs143 crore) and employee benefit provisioning (Rs93 crore) affected the margins during the quarter. The net profit declined by 35.5% YoY to Rs800 crore, which was lower than our estimate.
* The volumes were weak in FY2014, given poor customer sentiment, and the Indian automobile industry reported a 6.8% decline in volumes for the fiscal. Discounts in the system remain at elevated levels and manufacturers are hesitant to take price hikes. Despite the excise duty cut, the volumes for Maruti are expected to remain weak as potential buyers defer purchases. The sentiment is expected to improve post-general election as economic activity picks up. A deficient monsoon remains an overhang as Maruti has substantially increased presence in rural India.
* The stock is trading at 14.5x FY2016E earnings and offers a 10% upside from the current levels. We maintain a Buy recommendation on the stock with an unchanged price target of Rs2,130.
Valuations
In view of the raw material cost pressures witnessed during the quarter and the management’s hesitation in taking price hikes in the face of weak customer sentiment, we have reduced our earnings estimates for FY2015 and FY2016 by 8% and 5% respectively. The stock is trading at 14.5x the revised FY2016 earnings estimate of Rs135.1 and offers a 9% upside from the current levels. We reiterate a Buy recommendation on the stock with an unchanged price target of Rs2,130.
Buy Wipro Ltd For Target Rs.638 Wipro Ltd. is a leading Information Technology, Consulting & Outsourcing Company that delivers solutions to enable its clients.
• Wipro has posted a net profit after taxes, minority interest and share of profit of associates of Rs. 22265 mn for the quarter ended March 31, 2014 as compared to Rs. 17287 mn for the quarter ended March 31, 2013.
• Total Income has increased from Rs. 99208 mn for the quarter ended March 31, 2013 to Rs. 120995 mn for the quarter ended March 31, 2014.
• Profit before interest, depreciation and tax is Rs. 32649.00 mn as against Rs. 22635.00 mn in the corresponding period of the previous year.
• Wipro added 59 new customers for the quarter in IT Services segment.
• Wipro has recommended declaration of a final dividend of Rs. 5 per equity share of par value of Rs. 2/- each.
• Wipro has won a five-year infrastructure managed services contract with a Fortune 500 global leader in specialty chemicals.
• Wipro has won a seven-year engagement with Xoserve, an organization which is an integral part of the restructured gas distribution market in Britain. • A large global bank has selected Wipro as a strategic partner to provide quality assurance and automation services.
• Wipro has won a large deal in the Basel II Risk & Compliance domain from a large state owned bank in India.
Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 17% over 2013 to 2016E respectively.
QUARTERLY HIGHLIGHTS (CONSOLIDATED)
Results Updates- Q4 FY14,
The company’s net profit jumps to Rs. 22265.00 million against Rs. 17287.00 million in the corresponding quarter ending of previous year, an increase of 28.80%. Revenue for the quarter rose by 21.75% to Rs. 117036.00 million from Rs. 96131.00 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 9.03 a share during the quarter, registering 28.64% increase over previous year period. Profit before interest, depreciation and tax is Rs. 32649.00 million as against Rs. 22635.00 million in the corresponding period of the previous year.
OUTLOOK AND CONCLUSION
* At the current market price of Rs. 585.55, the stock P/E ratio is at 16.32 x FY15E and 14.81 x FY16E respectively.
* Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.35.88 and Rs.39.55 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 17% over 2013 to 2016E respectively.
* On the basis of EV/EBITDA, the stock trades at 11.08 x for FY15E and 10.09 x for FY16E.
* Price to Book Value of the stock is expected to be at 3.51 x and 3.03 x respectively for FY15E and FY16E.
* We recommend ‘BUY’ in this particular scrip with a target price of Rs.638.00 for Medium to
Buy Finolex Cables Ltd For Target Rs.165FCL is a leading cables player in India with more than 10% market share and enjoys a strong brand recall and sound financial health..
* However, in the past financials suffered with forex derivative exposure (during FY08-13); incurred cumulative loss of ~Rs300 crore
* Consequently, valuation de-rated significantly from average 15x in prederivative era to 3-8x during FY08-13
New beginning post-derivative hangover
* After an unpleasant experience with its derivative exposure, the management took corrective measures
* Nil exposure to derivatives at the end of FY13 and is intent to avoid in future
* Hence, this would be a new beginning with the valuation capturing the true potential of its business and financials
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