23/05/2014Buy Emami Ltd For Target Rs.488

Emami Ltd, a personal products company, has strong network of 3500 distributors and 5600 subdistributors, market presence across 75 countries across the world including India.
*  The company’s net sales stood at a record of Rs. 4457.10 million from Rs. 4509.50 million over the corresponding quarter last year.
*  Net profit after taxes, Minority Interest and Share of Profit of Associates of Rs. 1111.50 million for the quarter ended Q4 FY14 as compared to Rs. 939.80 million for the quarter ended Q4 FY13.
*  The Company has recommended a final Dividend of @ 400% on equity shares i.e. Rs. 4.00/- per share on face value of Rs. 1.00/- each for the financial year 2013-14.
*  The company plans to launch about 7-8 brands regarding personal products and Healthcare products during 2014-15.
*  Emami Limited has won the ET BENGAL CORPORATE AWARDS 2014 in the category of Best Financial Performance with turnover exceeding Rs.10000.00 million..
*  Net profit grew by 28% for the end of the FY14 to Rs 4024.70 million as against Rs 3147.40 million in the corresponding period of previous year.
* Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 20% over 2013 to 2016E respectively.
QUARTERLY HIGHLIGHTS (Consolidated)
Results updates- Q4 FY14,
Emami Ltd has strong network of 3500 distributors and 5600 sub-distributors, with a direct reach across 6,00,000 retail outlets, availability of products across 40,00,000 outlets, market presence across 75 countries across the world including India, has reported its financial results for the 4th quarter ended 31st MARCH, 2014.
Emami Ltd has achieved a turnover of Rs. 4457.10 million for the 4th quarter of the current year 2013-14 as against Rs. 4509.50 million in the corresponding quarter of the previous year. The company has reported an EBITDA of Rs. 1355.60 million against Rs. 1442.60 million in the corresponding quarter of the previous year. In Q4 FY14, net profit showed a good performance in both domestic and international market of Rs. 1111.50 million against Rs. 939.80 million in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 4.90 for the 4th quarter as against an EPS of Rs. 6.21 in the corresponding quarter of the previous year.
OUTLOOK AND CONCLUSION
*   At the current market price of Rs. 443.45, the stock P/E ratio is at 21.23 x FY15E and 18.74 x FY16E respectively.
*  Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.20.88 and Rs.23.66 respectively.
*   Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 20% over 2013 to 2016E respectively.
*   On the basis of EV/EBITDA, the stock trades at 15.69 x for FY15E and 14.21 x for FY16E.
*   Price to Book Value of the stock is expected to be at 9.26 x and 8.11 x respectively for FY15E and FY16E.
*   We recommend ‘BUY’ in this particular scrip with a target price of Rs.488.00 for Medium to Long term investment.
 Buy Ashoka Buildcon Ltd For Target Rs.125

EBITDA at Rs1.27 bn +17.7% YoY (vs estimate of Rs1.17 bn, as E&C EBITDA grew by 17%, margin at 16.2% up 380bps YoY, BOT EBITDA edged higher by 19% YoY, margin contracts
*   APAT at Rs250 mn (+2.6% YoY) in line with estimate supported by higher other income which offsets the increase in the capital cost. Reported exceptional expense towards write back of Ahmedabad Karmala project of Rs156 mn.
*   Upgraded FY15E EPS by 20% on higher construction revenue and traffic growth , roll forward Earnings of construction and BOT to FY15, revises target price to Rs125
*   Well funded portfolio, sufficient internal cash flows to cater current equity requirement with moderate leverage , Biggest beneficiary of new road projects to be tendered out in FY15E Maintain Buy
Q4FY14 operational performance above estimate
Q4FY14 E&C EBITDA grew by 17.2% at Rs845 mn and clocked an EBITDA margin of 16.2% expanded by 380 bps however E&C revenue came in at Rs4.97 bn declined by 10.2% versus estimate of Rs5.1bn. EBITDA margin expanded led by downward revision of expenses in some road projects. Construction revenue declined as execution of some of the power projects like Maharashtra T&D (Rs5.4 bn ), T&D project Tamil Nadu (Rs6.90 bn), execution also got delayed on some portion of Dhankuni Kharagpur road project due to pending clearances related ROBs. Revenue from the power division declined by 35% to Rs1850 mn.
Gross Toll Collection at Rs1.98 bn + 18.5% YoY, +8% QoQ
BOT segment witnessed revenue growth of 25.4% at Rs855 mn higher than estimate of 730 mn. However EBITDA margin contract at 50.6% down 270 bps due to lower traffic growth (O&M expense/fixed cost remaining the same).Blended EBITDA margin remained at 21% expands 430 bps due to lower contribution from construction division as well as higher contribution from BOT segment. The other income surged higher by 61% on account of interest income (Rs40 mn ) the company received for a loan given Jaora Naygaon Road project (Associate Company) as well dividend income came from road projects Viva Highways , Katni bypass. Higher other income partially offsets the higher than expected capital cost (Interest, depreciation). Reported profit includes exceptional expense towards write back of Ahmedabad Karmala project amounts to Rs156 mn. The effective tax rate came in at 49% higher than estimate of 46%.
Equity requirement of Rs1bn over the next 2-3 years
The current equity requirement stands at Rs1.5 bn which is needed to get infused over the next two to three years. The company needs to infuse Rs400mn in Dhankuni Kharagpur, Rs280mn in KSHIP road project, Rs100 mn in Sambalpur, and Rs300 mn in Chennai ORR project. The company has received 4th tranche of Investment of Rs1.33 bn from SBI Macquarie. The company also paid total Dividend of 30% - Rs. 1.50 per shares for FY14.
Maintain Buy – Revised target price to Rs125/share
Project execution on Dhankuni Kharagpur remains on track and toll rates escalation at Dhankuni Kharagpur project ahead of schedule will provide additional boost. We have revised the value for out BOT projects to Rs77 from Rs46/ share as we have roll forward earnings for BOT projects to FY15E. The major changed led by Dhankuni Kharagpur to Rs43.5/share (earlier Rs20/share). Sambhalpur – Baragarh to Rs22/ share from Rs10/share, Jaora Naygaon to Rs19/share from Rs14/share. We have valued the BOT projects at 14%/15.5% cost of equity for operational/ under construction / under development portfolio. While the E&C arm is valued at Rs 46 at 6x FY15 earnings.
  Buy Goodyear India Ltd For Target Rs.510 

For 1QCY2014, Goodyear India (GIL) reported a strong set of numbers. Its top-line surged by 15% yoy to `387cr, 10.6% higher than our estimate of `350cr. The EBITDA came in higher at `40cr, up 30.4% yoy; while margins expanded by 120bp yoy to 10.2%, mainly due to lower employee costs and other expenses (as a percentage of sales). On the back of efficient operating performance coupled with a 57.1% yoy increase in other income to `11cr, the net profit for the quarter grew 34.9% yoy to `28cr, in-line with our estimates.
Tractor tyre demand to drive future growth: GIL is a market leader in the tractor tyre industry. Tractor tyres accounted for ~60% of the company’s tonnage offtake in CY2012. As per industry reports, tractor sales are likely to grow in the range of 7-9% over CY2014-15E. Thus, we expect GIL to register a 6.3% CAGR in revenue over CY2013-15E.
Outlook and valuation:

On the back of strong growth in tractor tyre market and decline in rubber prices, earnings are expected to grow at a CAGR of ~11.9% over CY2013-15E to `118cr in CY2015E. Moreover, we forecast GIL’s CY2015E cash reserves to be at `439cr, which is ~47% of its current market capitalization. At the current levels, the stock is trading at a PE of 8.0x its CY2015E earnings and P/BV of 1.6x for CY2015E. We recommend a Buy rating on the stock with a target price of `510 based on SOTP valuation.