Buy Finolex Cables Ltd For Target Rs.180Finolex Cables Ltd (FCL) reported a very strong set of numbers in Q4FY2014 backed by a significant margin expansion (the OPM expanded by 231BPS YoY to 11.6%). Further, with the commencement of a captive solar power plant it availed a tax benefit; hence the reported PAT grew by 79% YoY to Rs 69 crore. With an adjustment of a forex gain and an investment diminution provision, the adjusted PAT grew by 51% YoY, significantly better than our estimates.
* Apart from the 23% YoY earnings growth (ahead of our estimate) in FY2014, FCL generated a very hefty cash flow from the operations of above Rs200 crore (about 85% of the operating profit). Further, with a debt repayment of Rs54 crore it ended FY2014 with a stronger balance sheet.
* Considering its margin expansion potential, we have revised upward our earnings estimates by 18% and 10% for FY2015 and FY2016 respectively. Based on this, we revise our SoTP-based price target to Rs180 (Rs152 per share at 10x FY2016 core earnings and an investment in Finolex Industries at Rs28 per share) and retain our Buy rating on the stock.
Buy DB Corp Ltd For Target Rs.360For 4QFY2014, DB Corp’s bottom-line performance was better than our expectation (net profit grew by 37.5% yoy to `76cr), aided by lower-than-expected tax expense (due to one-off tax benefit to the tune of `15cr from merger of its digital business). On the top-line front, the company reported a 14.1% yoy growth to `454cr (compared to our expectation of `463cr) with advertising revenue posting a 14.3% yoy growth to `340cr, while circulation revenue grew by 14.5% yoy to `84cr. Advertising revenue during the quarter was adversely impacted by lower government advertising, due to model code of conduct.
Healthy operational performance:
At the operating level, the company’s EBITDA grew by 11.3% yoy to `105cr, in spite of incurring higher expenses in its emerging editions as it launched the Patna edition during the quarter. The launch of the Patna edition led to an increase in EBITDA losses in emerging editions from `5.8cr in 4QFY2013 to `12.4cr in 4QFY2014. Meanwhile, mature editions continued to report healthy EBITDA margins (29.8% for 4QFY2014). Consequently, the consolidated OPM for 4QFY2014 stood at 23.0%, contracting by 57bp yoy.
Expect yield-driven advertising growth:
The Management commentary indicated that strong double-digit advertising growth is likely to continue, with the Management focusing on yield-driven advertising growth. At the same time, the Management will continue with its strategy of selectively hiking cover prices of mature editions. DB Corp’s average cover price of `3 is still among the lowest in its peer group.
Outlook and valuation:
At the current market price, DB Corp is trading at attractive valuations of 12.4x FY2016E consolidated EPS of `22.9, which is at a discount to our Sensex target valuation multiple. However, considering DB Corp’s multi-state leadership and expectations of strong double-digit advertising revenue growth, we believe, the stock deserves a premium to our Sensex target multiple. Hence, we recommend Buy rating on the stock with a target price of `360, based on 15.7x FY2016E EPS.
Buy NIIT Technologies Ltd For Target Rs.510We attended the “Analyst Meet” of NIIT Tech on May 12, 2013. The management has undertaken various initiatives to catapult the growth trajectory. The increased focus on Western Market and defocus from Government projects should increase earnings momentum, and improved cash conversion in FY15‐16E. Retain “BUY”
* Areas of Organizational Efforts:
The company is putting efforts on four fronts to accelerate growth 1) Grow Western market: Engaging in discussion with sourcing advisors 2) Scale IMS: Carved out IMS as a separate SBU 3) Leadership in Travel & Transport: Focus on the large deals in the vertical 4) Focus on Digital Services: Dedicated organisation to nurture ecosystem
* Blueprint for growth:
Mr. Sudhir Chaturvedi (COO) presented the “Blueprint for growth” wherein they have taken 10 measures to capture growth opportunity. 1) Corporate Agenda 2) Supersize top accounts: Efforts to categorize clients in Platinum & Gold account to create focus; 3) Occupy white spaces in all accounts: Fill the white space in these accounts with focus on IMS; 4) Open “Must Have” accounts: Focus on new logos, and assigned 4‐5 new logos per sales person for the year. Trying to create insight for the clients; 5) Win large deals: Engaging sourcing advisors to bring focus on large deals; 6) Product led revenues: Taking existing IP to other geographies. Ex.: Insurance solution has been taken to the US and Middle East from UK and bagged new logos in both the geographies 7) Alliances: Forging partnership for IMS with NTT and IBM to make bid attractive 8) People Excellence: Hiring based on geography and vertical along with sales training and right incentive plans; 9) Marketing Effectiveness: Working on creating more brand visibility from building efforts through new ideas 10) Governance & Process Excellence.
* Improved deal pipeline and earnings quality:
The order book grew by 103% YoY for FY14 with 83% of fresh business from Western Market. The management was confident of improving margin by 100bp in FY15 (excluding forex impact). We expect lower contribution of government projects would improve debtor days and cash‐coversion.
Buy Alembic Pharmaceuticals Ltd For Target Rs.350Vadodra based, Alembic Pharma, has been outperforming the Sensex since last June and has reported yet again double digit growth rates in Sales and Net Profit.
* The company’s consolidated sales and net profit have registered 22.73% and 40.41% growth respectively in current March quarter.
* Net sales up 23% at Rs. 4640.30 mn for the quarter against Rs 3780.80 mn in corresponding quarter last year. Net profit is up by 40.41% for the quarter at Rs 612.90 mn against Rs 436.50 in Q4 FY13.
* Profit before tax jumped by 46% in the current March quarter. PBT stood at Rs. 807.80 mn in Q4 FY14 compared to Rs. 551.80 mn in the same quarter previous year.
* EBDITA or operating profit of the company rose by 43% from Rs 656.50 mn to Rs. 940.60 mn in the current March quarter.
* International Generic Formulations sales up 76% for the current quarter at Rs. 1367 mn against Rs. 776 mn in corresponding quarter last year. India Branded formulations sales up 14% for the quarter at Rs. 1995 mn against Rs. 1753 mn in corresponding quarter last year.
* The company has recommended dividend of 150% for the year 2013-14.
* During the quarter, 1 ANDA application were filed taking cumulative ANDA filings of the Company to 61. 1 ANDA approval was received during the quarter. Cumulative ANDA approvals now stand at 32 (including 4 tentative approvals).
* Net Sales and PAT of the company are expected to grow at a CAGR of 21% and 26% over 2013 to 2016E respectively.
QUARTERLY HIGHLIGHTS (CONSOLIDATED)
Q4 FY14
The net sales of Alembic Pharma rose by 22.73% in Q4 FY14 compared to the corresponding quarter in the previous year. Net profit jumped by 40.41% on consolidated basis from Rs 436.50 mn in Q4 FY13 to Rs. 612.90 mn in the current quarter. The EBDITA increased by 43.27% in Q4 FY14. The Net profit and EBDITA margin rose by 167 and 291 basis points respectively in current March quarter.
OUTLOOK AND CONCLUSION
* At the current market price of Rs. 298.00, the stock P/E ratio is at 20.23 x FY15E and 17.09 x FY16E respectively.
* Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.14.73 and Rs. 17.43 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 21% and 26% over 2013 to 2016E respectively.
* On the basis of EV/EBITDA, the stock trades at 13.69 x for FY15E and 11.56 x for FY16E.
* Price to Book Value of the stock is expected to be at 5.89 x and 4.38 x respectively for FY15E and FY16E.
* We recommend ‘BUY in this particular scrip with a target price of Rs.350.00 for Medium to Long term investment.
Buy Birla Corporation Ltd For Target Rs.382Revenue below estimate on lower realizations:
BCORP’s 4QFY14 net sales grew by 16.9% YoY (9.6% QoQ) to INR7.8b (v/s est. INR8.4b). Cement revenue grew 17% YoY to INR7.2b (v/s est. of INR7.8b), led by in-line volume of 1.9mt (+11.6% YoY, 5.4% QoQ) and lower realizations of INR3,753/t (+4.8% QoQ, YoY) v/s estimate of INR4,028/t. Jute business, which was partly under suspension till 3QFY13, contributed ~8% to revenue.
* Lower realizations, cost push keep profitability weaker than estimate:
EBITDA de-grew by 16% YoY (+86% QoQ) to INR555m (v/s est. of INR1.3b) impacted by lower revenue and higher other expenses. EBITDA margin stood at 7.1% (-3pp YoY, +3pp QoQ), while cement EBITDA/t was at INR452 (+INR174 QoQ, -INR55 YoY). Reported PAT stood at INR262m, further negated by amortization of foreign currency loan (albeit partially offset by write-back of sales tax). Non-cement businesses reported PBIT loss of ~INR27m (v/s profit of ~INR8m in 4QFY13 v/s loss of INR22m in 3QFY14).
* Other highlights:
(a) declared divided of INR6/share (v/s INR7.5 in FY13), (b) net cash stood at ~INR7b, (c) CBRI has sought extension up to September 2014 from Supreme Court for mining study at Chittorgarh Fort, next hearing in October 2014.
* Valuation and view:
Favorable market mix (North, East and Central), coupled with efficient operations has the potential to offer strong resilience to operating performances if demand weakens further. Balance sheet remains strong with net cash of INR7b and aids visibility to free cash flow generation. We cut FY15E/16E EPS estimates by ~12% each to ~INR36/46 to factor for lower realizations and higher cost push. The stock trades at 8.5x/6.6x FY15E/FY16E EPS, EV/EBITDA of 3.8/2.7x and EV/t of USD24. Maintain Buy with a target price of INR382 (~4x FY15E EV/EBITDA or ~USD35/t).
@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@
Weekly Stock Market Prediction 19th May 2014 – 23rd May 2014
Weekly planetary position: During the week, Moon will be transiting in Capricorn & Aquarius. Ketu in Aries. Sun & Mercury in Taurus. Mars in Virgo. Venus in Pisces. Lord Saturn & Rahu in Libra. Jupiter in Gemini, Pluto in Sagittarius. Neptune in Aquarius & Uranus in Pisces.
FOLLOWING SECTORS WILL BE RECEIVING ASTROLOGICAL SUPPORT:
INFRASTRUCTURE sector will also be getting strong astrological support. Buy Patel Eng., NCC, Simplex Infra, IRB Infra, IVRCL, Essar Ports, Adani Ports & GMR Infra etc on every decline.
AUTO sector will continue receiving strong astrological support. Buy Maruti, Mahindra & Mahindra, TVS Motor, Eicher Motor, Hero Moto etc on dips. This sector was predicted last week also & during the week - Tata Motor, M&M, TVS Motor, Escorts, Maruti, Ashok Leyland & Hero Moto went up by 8-25%.
MINING / DRILLING sector will be receiving strong astrological support. Buy Sesa Sterlite, ABAN Offshore, Selan Exploration, NMDC, MMTC, GOL Offshore etc on dips.
PLASTIC sector will be receiving astrological support. Buy Jain Irrigation, Sintex, VIP Industries, Cosmo Films & Neelkamal etc on dips. This sector was predicted last week also & during the week – Jain Irrigation, Nilkamal, VIP Industries, Texmo Pipe & Sintex moved up by 13-40%.
POWER sector will also be getting astrological support: Buy BF Utilities, NTPC, Power Grid, Reliance Power, CESC & Adani Power etc on dips.
CEMENT sector will also continue getting stron astrological support. Buy Ambuja Cement, Prism Cement, Shree Cement, ACC & Indian Cement on every dip
CAPITAL GOODS sector i.e., BHEL, Crompton, Havels, Siemens, ABB & L&T ect will also be receiving astrological support. This sector was predicted last week also & during the week - L&T, Thermex, Siemens & BHEL moved up by 10-20%.
Always be very cautious, when some main planets i.e. Rahu, Ketu, Jupiter & Lord Saturn are changing their houses. It may be that certain sectors which were continuously getting support for long time may stop receiving support due to change in position by above planets & stocks of those sectors starts coming down, resulting in losses. This is common reason, why most people loss money.
One should trade only in the stocks of that sectors which are getting very strong astrologically support.
Sectors which get very strong ASTROLOGICAL support are not normally affected by downfall in the market.
No comments:
Post a Comment