Ashok Leyland (Q2 FY15) – BUY
CMP Rs47.4, Target Rs55.0, Upside 16.0%
– Revenues at Rs32.2bn was in line with our expectations and represented a growth of 26.2% yoy and 29.9% qoq
– Volumes were higher by 9.8% yoy and blended realizations rose by 15% yoy; Sequentially volumes were higher by 29.6% while realizations rose 0.2%
– While M&HCV volumes were higher by 14.3% yoy, LCV volumes were flat
– OPM at 7.3% was substantially ahead of our and street estimates and represented a jump of 508bps yoy and 260bps qoq, while gross margins were higher both sequentially and yoy, staff costs and overheads were lower on yoy basis
– Pre-exceptional PBT was reported at Rs563mn compared to our estimates of Rs126mn.
– Upgrade to BUY from Accumulate rating and raise our target price to Rs55
Click here for the detailed report on the same.
Dabur India (Q2 FY15) – BUY
CMP Rs228, Target Rs263, Upside 15.5%
– Dabur recorded modest 10.4% yoy revenue growth at Rs19.2bn during Q2 FY15 – marginally below our expectations of Rs19.6bn due to subdued performance of international business
– Domestic FMCG business revenues increased by ~14% yoy driven by 8.7% yoy underlying volume growth while international business registered slower ~8% yoy growth
– Operating margins declined by 60bps to 18.2% due to 70bps/40bps increase in raw material/staff cost. Adjusted net profit recorded 15.1% yoy growth at Rs2.9bn, in line with our expectations
– We expect Dabur to witness a revenue/PAT CAGR of 14%/17% respectively over FY14-16. Maintain Buy with 9-mth price target of Rs263
Click here for the detailed report on the same.
Godrej Consumer Products (Q2 FY15) – BUY
CMP Rs926, Target Rs1,065, Upside 15.1%
– GCPL recorded slower ~5% yoy growth in revenues at Rs20.5bn during Q2 FY15 below our expectations of Rs21.3bn, due to slower growth in international business and weak performance of domestic business
– Domestic FMCG revenues grew by 6.5% yoy to Rs10.9bn due to slower growth in household insecticide segment (impacted by adverse climatic conditions). Soaps segment registered healthy 13% yoy growth led by price hikes while hair colour segment recorded volume led 9% yoy growth despite the high base
– International business reported mere 2% yoy revenue growth (12% yoy constant currency terms) at ~Rs9.7bn due to currency translation and sluggish performance of European business
– OPM expanded by 140bps to 16.7% fuelled by lower staff/advertising and overhead cost
– We expect GCPL to witness a revenue/PAT CAGR of ~17%/19% respectively over FY14-16. Recommend BUY with 9-mth price target of Rs1,065
Click here for the detailed report on the same.
LG Balakrishnan Bros (Q2 FY15) – BUY
CMP Rs713, Target Rs939, Upside 31.7%
– Revenues at Rs2.7bn higher by 6.8% yoy; was lower than our estimates, while the growth in metals forming section was strong at 14,8% yoy, transmission segment reported lower than expected growth at 10.9%
– OPM at 13.5% was higher by 131bps yoy and 104bps qoq and was highest since Q2 FY10, improvement in gross margins was the key driver
– PAT at Rs215mn was higher by 46% yoy buoyed by exceptional item
– Maintain our BUY rating with a 2-year price target of Rs939
Click here for the detailed report on the same.
Talwalkars Better Value Fitness (Q2 FY15) – BUY
CMP Rs239, Target Rs280, Upside 17.0%
– Talwalkars showed healthy sales momentum at 20.3% yoy in a seasonally strong quarter; same store sales up 8.9% yoy
– Margin up 365bps yoy driven by operational synergies and moderated ad spending for Zumba, NuForm and Transform
– PAT outpaced topline growth on better margins and lower tax rate
– Retain positive stance and revise up earnings estimates for FY15/16; upgrade to BUY with 9-12mth target of Rs280
Click here for the detailed report on the same.
Larsen & Toubro Ltd (Q2 FY15) – BUY
CMP Rs1,653, Target Rs2,120, Upside 28.2%
– LT continues to disappoint on topline growth due to weaker execution in international projects and many large projects in planning & designing phase
– Consolidated order inflow for the quarter remained quite strong at 17% yoy at Rs398bn, largely contributed by domestic orders. Order book for the consolidated entity stood at Rs2,144bn, up 14% yoy
– Order inflow from the domestic sector was quite high during the quarter on the back of some ordering of long pending power projects and pick up in orders from the transportation industry
– Operating margin for the company contracted by 205bps yoy due to subdued performance at the Hydrocarbon subsidiary and Q2 FY14 results were aided by extra claims
– The company has reduced its revenue growth guidance to 10-15% from 15% yoy growth in consolidated revenue due to the slower execution
– Meanwhile the company has maintained its order inflow growth of 20% yoy for FY15
– Working capital continued to remain high due to lower customer advances and stagnant customer payments
– Infrastructure segment to boost earnings; Maintain BUY rating with a 2-yr price target of Rs2,120
Click here for the detailed report on the same.
GSPL (Q2 FY15) – BUY
CMP Rs98, Target Rs115, Upside 17.3%
– Revenues at Rs3.5bn were much higher than our and street estimates owing to one time income of Rs900mn attributable to retrospective revision in tariffs
– Volumes were at 24.7mmscmd for Q2 FY15 as compared to our estimates of 24.4mmscmd
– OPM at 92.1% was higher than our estimates of 86.8%, sans the one time income too margins were higher than our estimates
– Decrease in debt levels led to decline in interest expenses on yoy basis
– We maintain our BUY rating as we expect the gas availability to increase in the country, GSPL will be a major beneficiary; we raise our target price to Rs115
Click here for the detailed report on the same.
Strides Arcolab (Q2 FY15) – BUY
CMP Rs682, Target Rs830, Upside 21.7%
– Standalone revenues, margins miss forecast; consolidated revenues up 19% yoy
– Global pharma revenue growth of 19.2% yoy driven by robust emerging market (+31.5% yoy) and regulated markets’ growth
– Consolidated EBIDTA jumps 60% yoy while margin improves to 21% from 16% a year ago
– Core pharma business deserves rerating; assign BUY for 9-12mth target of Rs830
Click here for the detailed report on the same.
Marico (Q2 FY15) – BUY
CMP Rs317, Target Rs365, Upside 15.1%
– Marico matched our both revenue and PAT estimates by recording strong 28%/12% yoy increase at Rs14.3bn /Rs1.2bn respectively during Q2 FY15
– Parachute’s rigid portfolio registered 55% yoy growth in revenues driven by ~7% yoy volume growth, while Saffola revenues grew by 18% yoy led by 9% volume growth
– International business recorded 12% yoy growth in revenues at Rs3.5bn with constant currency growth 16% yoy
– OPM contracted by 150bps to 13.7% due to sharp 570bps increase in raw material cost on account of sharp rise in copra prices. 250bps/140bps decline in overhead and staff cost restricted further margin erosion
– We expect Marico to witness a revenue/PAT CAGR of 18%/22% respectively over FY14-16. Maintain Buy with a revised 9-month target price of Rs365 (earlier Rs329)
Leave a Reply