Fundamentals February 12, 2013

Nik's Diary

The Indian market opened flat with a negative bias, mirroring SGX Nifty which is trading lower in the opening trades. Major Asian indices except Nikkei are still closed for the Lunar New Year holiday. The US market saw modest weakness throughout the trading session. Selling pressure prevailed although subdued.  The major averages climbed near the unchanged line in the final hour of trading but still ended the day in the red. The European markets finished Monday's trading session with mixed results. Some negative news for pharmaceutical company Novo Nordisk weighed on investor sentiment at the start of the new trading week. Meanwhile Indian shares swung between gains and losses before ending modestly lower on Monday, dragged down by capital goods, IT and FMCG stocks. Adding to growth concerns, Reserve Bank of India Governor cautioned that the country was headed for the highest ever current account deficit this fiscal year.

ONGC - RU3QFY2013

ONGC reported better than expected 3QFY2013 results. The company’s top line increased by 15.7% yoy to  `21,093cr (above our expectation of  `19,294cr). ONGC’s crude oil net realization increased by 6.7% yoy to US$47.9/bbl and gas realizations increased 10.5% yoy to 8.4/scm due to INR depreciation against the USD. Crude oil sales volumes grew 7.0% yoy to 6mn tonnes while gas sales volumes remained flat yoy at 5bcm. The company shared a subsidy burden of `12433cr in 3QFY2013. The company's EBITDA increased by 5.4% yoy to `11,342cr. Other income grew by 33.7% yoy to  `1,280cr which resulted in adjusted net profit growing by 54.5% yoy to `5,562cr (above our expectation of `4,843cr). The company has maintained its oil/gas production guidance to 27.0mn tonnes/25.7bcm and 29.1mn tonnes /26.4bcm for FY2013 and FY2014, respectively. Source: Angel Broking

JaiPrakash Associates - RU3QFY2013

For 3QFY2013, Jaiprakash Associates posted mixed set of numbers with strong performance on revenue however earnings were lower than our estimate owing to lower-than-expected operating performance On the top-line front, company’s reported revenue of  `3,431cr in 3QFY2013, registering a growth of 15.5% yoy which was higher than our estimate by 4.3%. The cement segment had growth of 7% on a yoy basis while construction segment and real estate revenue grew by 2.7% and 98.9% on a yoy basis respectively. Blended EBITDA margins decline by 603bp/395bp on a yoy/qoq basis to 23.2% and was below our expectation of 25.9%. Cement margins came in at 8.0% which led to decline in margins. Interest cost stood at  `533cr a jump of 20.7%/14.7% on yoy/qoq basis and marginally higher than our estimate of `478cr. Depreciation cost came at `181cr a jump of 9.9% on yoy basis. On the bottom-line front, company reported a PAT `111cr a dip of 64.2% on a yoy basis owing to lower-than-expected at operating level and high interest cost. Source: Angel Broking

Britannia Industries - RU3QFY2013

Britannia Industries posted a 16.8% yoy growth in standalone topline to `1,453cr, which was in-line with estimates. The topline growth was aided by price hikes carried out by the company. OPM fell by 20bp yoy to 6.4%. Net Profit rose by 5.4% yoy to `57cr. Source: Angel Broking

Indraprasth Gas - RU3QFY2013

Indraprasth Gas reported robust 3QFY2013 results. Net sales grew by 31.1% yoy to  `869cr which was driven by increases in both, sales as well as realizations. CNG and PNG volumes increased by 7.6% and 17.4% yoy to 194mn kg and 84mmscm, respectively. Average CNG realisation increased 20.0% yoy to `38/kg, whereas average PNG realizations increased by 11.3% yoy to  `26/scm. EBITDA increased by 24.9% yoy to `188cr. However, EBITDA margin slipped 107bp yoy to 21.6% due to higher cost of gas purchases. Further, interest expense was flat yoy at `14cr in 3QFY2013. Tax provisions for this quarter were also higher at 32.4% compared to 31.9% in 3QFY2012. Hence, net profit grew by 24.3% yoy to `86cr.  Source: Angel Broking

Hexaware - RU3QFY2013

For 4QCY2012, Hexaware reported broadly in-line set of results. The USD revenue came in at US$92.4mn, down 0.4% qoq. In INR terms, revenue came in at  `502cr, down 1.0%. The company’s EBITDA and EBIT margin declined by ~480bp qoq each to 16.9% and 15.1%, respectively. Margin decline was less than expectations as well as less than management’s guidance of ~500-700bp qoq. PAT came in at `66cr. Management has guided for double digit revenue growth in CY2013 and indicated intention to retain ~50% dividend payout ahead. Management has given 2-3% qoq USD revenue growth for 1QCY2013 and expects margins to improve by ~150-200bp qoq in 1QCY2013. The company expects growth to be driven by aggressive client mining outside of top 10 clients and BFSI vertical. We continue to remain positive on the stock and the target price in currently under review. Source: Angel Broking

Punj Lloyd - RU3QFY2013

For 3QFY2013, Punj posted mixed set of numbers with muted performance on revenue and EBITDAM front, however higher share of profits from associates led to a profit at earnings level. The company reported a flat top-line growth of 2.6% yoy to  `2,881cr in 3QFY2013. EBITDA margins showed an improvement of 431bp yoy to 10.1% in 3QFY2013. For the quarter, interest cost increase by 22.2% yoy to `198cr while depreciation came in flat at  `88cr respectively. On the bottom-line front, PAT came in at `9cr in 3Q FY2013 vs.  `70cr in 2QFY2013. This was mainly due to higher share of profit from associate (`8cr vs. a loss of  `5cr in 2QFY2013). Source: Angel Broking

GIPCL - RU3QFY2013

For 3QFY2013, GIPCL reported sluggish top-line performance in-line with our expectations. Top-line declined by 4.8% yoy to  `369cr, in spite of 6.6% yoy increase in power generation. OPM expanded by 1,344bp yoy to 37% mainly on account of 1,207bp yoy reduction in fuel cost. The company posted robust growth in net profit to  `70cr (v/s  `17cr in 3QFY2012) aided by margin expansion and lower tax provision. Source: Angel Broking

Dishman Pharma - RU3QFY2013

Dishman Pharma reported sales mostly in line with expectations, while the net profit came in below expectations. The top-line grew by 19.6% to `318cr , mostly in line with expectations of  `315cr during the quarter 3QFY2013. The top-line growth was mainly driven by the CRAMS, which grew by 23.8%, while MM grew by 12.4% yoy. The OPM came in slightly lower than expectations at 19.1%, a 120bp decline. This along with high interest expenses led the net profit to come in at `16.4cr, almost same as `16.7cr. Source: Angel Broking

Godawari Power and Ispat - RU3QFY2013

Godawari Power and Ispat (GPIL) reported healthy 3QFY2013 results. The company’s net sales grew by 25.3% yoy to  `603cr on account of higher sales volumes of Billets, HB wire and ferro alloys partially offset by lower realizations. On the operating front EBITDA margin was flat at 11.6% and EBITDA grew by 24.9% yoy to  `70cr. Interest expenses increased by 8.9% yoy to  `30cr however, net profit increased by 75.8% yoy to `20cr. Source: Angel Broking