Bharat Forge (Q2 FY15) – BUY
CMP Rs885, Target Rs1,250, Upside 41.2%
– Revenues at Rs11.4bn higher by 34.7% yoy; better than our estimates
– Tonnage volumes surged 22.8% yoy and 7% qoq
– Realizations were higher by 9.7% and 7.7% qoq
– OPM at 28.5% was higher by 217bps yoy, on the back of benefits of operating leverage and better product mix, favorable product mix
– PAT at Rs1.8bn jumped 81% yoy and 20% qoq was substantially better than our estimates
– Outlook for domestic auto business is improving but will take time to stabilize, while non-auto business should see large opportunities from the Make in India campaign, Outlook for US market is robust
Maintain our BUY rating with a 2-year price target of Rs1,250
Dhanuka Agritech Ltd (Q2 FY15) – BUY
CMP Rs511, Target Rs800, Upside 56.5%
– Q2 FY15 PAT grew 30.2% yoy well above our estimates on the back of improvement in gross margins and strong operating performance.
– Revenue stood at Rs.2,833mn, in line with our expectation of Rs2,825mn.
– Gross margins expanded by 197bps yoy to 37.5% driven by better product mix and stable RM cost of specialty products.
– Operating margins at 19.5% came as a positive surprise; beat our expectations of 16.7%.
– Outlook remains strong; Maintain Buy with a 24-month price target of Rs800.
Motherson Sumi (Q2 FY15) – BUY
CMP Rs410, Target Rs500, Upside 21.9%
– Revenues at Rs80bn came in lower than our estimates, wherein the growth in SMP revenues were substantially below our estimates
– Standalone OPM was tad better than expectations at 18%, SMP margins came in at 6% v/s our expectations of 5.8%, SMR margins were at 9.1% below our estimates of 9.5%
– While margins for the SMR and SMP were higher on a yoy basis, standalone margins were lower by 270bps yoy causing consolidated OPM to fall by 49bps yoy
– We maintain BUY with a price target of Rs500