Mid Cap Ideas Quarterly Report - June06 Part-2.p65

Transcription

4 July 2006
Results Preview
Quarter
Quarterended
endedMarch
June 2006
Investment Ideas for
Private Clients
Retail Research Team
MOTILAL OSWAL
Prices as of Friday, 30 June 2006
MOTILAL OSWAL
1
MOSt Mid-Caps Summary
MOSt Mid-Caps Ideas
Summary
Ador Welding
Amar Remedies
Andhra Sugar
Apolo Tyres Ltd
Asain Hotels
Atlas Copco
Balkrishna Industries
Ballarpur Industries
Blue Star
Ceat
EIH Associated Hotels
Emco
Enkei Castalloy
Era Constructions
Esab India
Genus Overseas
GIPCL
Goldiam International
Goodlass Nerolac
Goodricke Group
Gujarat Alkalies &
Chemicals
Helios & Matheson
India Card Clothing
Investment and Precision
Casting
Ipca Laboratories
Jay Shree Tea
MOTILAL OSWAL
255
256
258
260
262
264
266
268
270
272
274
276
278
280
282
284
286
288
290
292
294
296
298
300
302
304
306
Top Picks
Jindal Saw
308
Kajaria ceramics
310
KSB Pumps
312
Lakshmi Machine Works
314
Maharashtra Seamless
316
Mahindra Ugine Steel
318
Man Industries
320
Mastek
322
Mcleod Russel India
324
Mercator Lines
326
MRF
328
Nagarjuna Agrichem
330
Navneet Publications
332
NIIT
334
Paper Products
336
Pratibha Industries
338
PSL
340
Rallis India
342
Sarla Polyester
344
Simbhaoli Sugar
346
Simplex Infrastructure
348
Stone India
350
Taj GVK Hotels & Resorts
352
Tamil Nadu Newsprint
354
& Papers
Tantia Construction
356
TRF
358
Ugar Sugar
360
Welspun Gujarat
362
Stahl Rohren 30 June 2006 254
Stock
CMP
Target
Upside
(Rs)
(Rs)
(Rs)
EPS (x)
FY06
FY07
PE
FY06 FY07
Genus Overseas
169
308
82%
13.1
25.1
12.9
Era Construction
291
400
37%
14.2
24.7
20.5 11.8
6.7
Taj-GVK Hotels
191
240
35%
7.4
10.9
25.8 17.5
Man Industries
192
250
30%
13.6
25.1
14.1
7.6
MUSCO
135
* 195
28%
19.1
21.3
7.1
6.3
Stone India
207
** 278
27%
9.2
15.6
22.5 13.3
Note: Upside is annualised; * - 18-month target; ** - 15-month target
Major change in recommendation
Stock
Current
Reco
Current
Price (Rs)
Previous
Reco
Previous
Price (Rs)
Buy
114
Book Profit
150
Ipca Laboratories
Buy
260
Book Profit
394
Partly Book Profit
367
Buy
296
NIIT
Current price as on 30 June 2006; Previous price as on 31 March 2006
April-June 2006 Quarter:
NEW STOCKS ADDED
DISCONTINUED COVERAGE :
•
•
•
•
•
•
•
•
•
•
Atlas Copco
Blue Star
Enkei Castalloys
Goodlass Nerolac
KSB Pumps
Pratibha Industries
MOTILAL OSWAL
2
Control Print
Excel Crop Care
Gujarat Ind. Power Company
Williamson Tea
30 June 2006
255
SECTOR: WELDING
Ador Welding
HOLD - Rs377
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
QUARTERLY PERFORMANCE
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
1QE Full Year Full Year
2416
2850
3280
352
405
480
25.9
29.8
35.3
14.6
12.7
10.7
34.2
32.8
32.3
46.4
39.4
38.8
Net Sales
Change (%)
500.4
26.7
799.0
19.9
580.0
15.9
2,416.0
22.7
2,850.0
18.0
EBITDA
Change (%)
As % of sales
55.7
25.7
11.1
172.5
40.9
21.6
72.0
29.3
12.4
455.3
64.5
18.8
540.0
18.6
18.9
Interest
Depreciation
Other Income
Extraordinary inc / (exp)
(3.2)
13.5
18.9
-
8.4
20.1
14.8
1.2
20.0
10.0
-
(1.1)
62.9
40.9
(48.0)
90.0
40.0
-
PBT
Tax
64.3
13.2
157.6
21.9
62.0
10.0
482.4
82.0
490.0
85.0
Reported PAT
Adjusted PAT
Change(%)
51.1
51.1
153.0
135.7
136.9
30.6
52.0
52.0
1.8
400.4
352.4
85.6
405.0
405.0
14.9
230.11
150.00
3.98
199.43
130.00
3.45
High level of construction activity in all sectors should drive
demand for welding products. Exports markets like Middle
East and Africa are also showing strong growth. Ador's has
come up with new products in consumables, equipments and
also in new areas like power generators, waste management
systems, effluent treatment plants, which will act as future
growth drivers.
•
Major developments: Rise in prices of special quality steel
being used by the company from $650/ton to $750-800/ton
over the last six months could affect margins.
•
In 1QFY07, we expect net sales of Rs580m, up 16% YoY. PAT is
expected to be Rs52m, up only 2% due to higher depreciation
and lower other income.
•
We have downgraded estimates for FY07, due to slowdown
in consumables business and lower margins. We expect net
sales of Rs2.85b (earlier Rs3b) up 18%, and PAT of Rs405m
(earlier Rs448m) up15%.
•
Ador Welding
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
No. of Equity Shares (m) : 13.60
At CMP, the stock trades at 13x FY07E EPS of Rs30 and 11x
FY08E EPS of Rs35.3. We estimate fair value for the stock at
Rs440. We maintain HOLD considering the slowdown in
consumables growth and uncertainty over steel prices.
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
256
3
30 June 2006
257
SECTOR: FMCG
Amar Remedies
BUY - Rs67
30 June 2006
YEAR
END
06/05A
06/06E
06/07E
•
•
Amar Remedies
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E JUNE
FY06
3Q
FY06E
FY05 FY06E
1,067.8
1,600.0
2,100.0
68.8
205.0
270.0
6.2
7.8
10.3
10.9
8.6
6.5
25.8
23.8
24.9
22.2
22.5
28.1
Net Sales
Change (%)
440.3
369.2
n.a.
1,067.8
29.9
1,600.0
49.8
EBITDA
Change (%)
As % of sales
80.5
18.3
53.2
n.a
14.4
99.5
83.2
9.3
268.0
169.3
16.8
4.2
1.9
0.2
-
4.0
2.0
0.2
-
20.1
6.4
1.6
-
18.1
6.9
0.7
-
PBT
Tax
74.6
22.5
47.4
16.2
74.6
5.8
243.7
38.7
Reported PAT
Adjusted PAT
Change(%)
52.1
52.1
31.2
31.2
68.8
68.8
90.1
205.0
205.0
198.0
Amar Remedies is amongst the earliest companies in India to
make ayurvedic vegetarian toothpaste, and has managed to
carve a niche for itself especially in the rural market. Amar
has a 3.2% share of the domestic toothpaste market.
Interest
Depreciation
Other Income
Major developments: Amar is setting up a 30m toothpaste
tubes per month plant at Dehradun to take benefit of tax
advantages in Uttaranchal and also tap the growing Indian
market. The Rs200m unit is expected to contribute Rs1.1b
to company's FY07 (June-ending) revenues.
•
Recently, prices of two main raw materials, flavour menthol
& sorbitrol, have increased 80% and 29%, respectively. This
could impact the operating margins of the company.
•
In 4QFY6, we expect net sales of Rs369m and PAT of Rs31.2m.
•
In view of higher raw material prices, we are downgrading
our FY06 PAT estimates by 11% to Rs205m, up198% YoY.
•
At CMP, the stock trades at 8.6x FY06E EPS of Rs7.8 and 6.5x
FY07E EPS of Rs10.3. We maintain a BUY with a price target
price of Rs100 (10x FY07E EPS).
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
258
4
30 June 2006
259
SECTOR: SUGAR
Andhra Sugar
BUY - Rs129
30 June 2006
YEAR
END
03/05A
03/06E
03/07E
Andhra Sugar
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
4325
4923
5600
395
595
675
14.6
23.3
24.9
8.8
5.5
5.2
20.5
24.7
23.2
14.5
18.9
21.0
Net Sales
Change (%)
1,209.3
13.5
EBITDA
Change (%)
As % of sales
287.5
57.6
23.8
274.9
15.9
21.7
64.0
62.3
43.5
-
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
•
Andhra Sugar's both divisions, sugar and caustic soda, continue
to perform well.
•
Major developments: Government has allowed duty free
import of sugar till September 2006. However, it is not
expected to have a major effect on sugar prices as the landed
cost of imported sugar is over Rs23/kg, compared to domestic
price of Rs18-19/kg.
•
Sugar prices after rising in April and May are lower by Re1/
kg. However, the outlook on sugar remains positive
considering firm global prices.
•
Caustic soda prices are again showing an increasing trend.
Average ECU realisation is up from Rs19,950/ton in 4QFY06
to Rs22,500/ton in 1QFY07 (Rs24,500 in 1QFY06).
•
In 1QFY07, we expect net sales of Rs1.35b, up 12% YoY and
net profit of Rs152m, up 7% YoY.
•
For FY07, we expect net sales of Rs5.6b, up 14% and PAT of
Rs675m, up 7%.
•
At CMP, the stock trades at 5x FY07E EPS of Rs25. We maintain
BUY with a target price of Rs200.
MOTILAL OSWAL
30 June 2006
Interest
Depreciation
Other Income
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
260
5
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
1,264.4 1,350.0
17.1
11.6
4,922.9
13.8
5,600.0
13.8
292.9
1.9
21.7
1,054.3
38.6
21.4
1,213.1
15.1
21.7
64.9
67.0
61.8
35.0
64.0
62.3
60.0
-
235.1
254.3
300.9
35.0
227.8
245.7
240.0
-
204.7
62.8
169.8
32.9
226.6
75.0
830.8
235.4
979.6
305.0
141.9
141.9
67.5
136.9
171.9
41.6
151.6
151.6
6.8
595.4
630.4
59.4
674.6
674.6
7.0
183.48
60.00
4.66
183.48
60.00
4.66
30 June 2006
261
SECTOR: TYRES
Apollo Tyres
30 June 2006
YEAR
END
03/05A
03/06A
03/07E
•
•
•
•
•
•
•
•
NET SALES
(RS M)
22168.6
26255.2
28650.0
PAT
(RS M)
501
729
495
CASH EPS
(RS)
27.88
38.00
31.17
CASH P/E
(X)
8.57
6.29
7.67
Apollo Tyres
BUY - Rs239
ROE
(%)
Y/E MARCH
8.69
11.58
7.58
ROCE
(%)
9.02
11.36
8.30
Major Developments: Rubber prices are up from Rs85/kg in
April 2006 to Rs108/kg by end-June 2006. This coupled with
higher crude prices has pushed up raw material costs.
During the quarter, tyre companies resorted to frequent price
hikes, both in the OE and replacement markets. Average price
hikes are in the range of 25-30% with OEMs (except car
segment) and 15-20% in the replacement market. Effect of
the price hikes would be visible in 2QFY07.
The board has approved a 1:6 rights issue, and allotment of
warrants in the ratio of 1:4.
Apollo has acquired 100 per cent controlling interest in Dunlop
Tyres International (Proprietory) Ltd, South Africa (DTIPL)
along with its subsidiaries in Zimbabwe and the UK.
It is also evaluating the possibility of stopping production of
radial tyres (for luxury cars) in India and importing them from
South Africa to meet local demand.
In 1QFY07, we expect revenues of Rs6.3b, up 11% YoY, and
PAT of Rs55m, down 67% YoY.
For FY07, we expect net sales of Rs28.65b, up 9% YoY, and
PAT of Rs495m, down 32% YoY.
At CMP of Rs239, the stock trades at 8x FY07E cash EPS of
Rs31.2. We recommend BUY on expectations of a sharp
turnaround 2QFY07 onwards.
MOTILAL OSWAL
30 June 2006
FY07
FY06 FY07E
5,680.9
12.0
EBITDA
Change (%)
As % of sales
531.0
10.6
9.3
563.9
37.9
7.6
440.0
(17.1)
7.0
2,227.4
35.1
8.5
1,870.0
(16.0)
6.5
Interest
Depreciation
Other Income
112.6
170.0
2.3
-
133.8
204.9
3.2
(86.8)
140.0
220.0
2.0
-
505.6
727.9
17.1
(52.7)
450.0
700.0
20.0
-
PBT
Tax
250.7
83.8
315.2
51.4
82.0
27.0
1,063.7
282.0
740.0
245.0
Reported PAT
Adjusted PAT
Change(%)
166.9
166.9
6.8
263.8
177.0
(12.7)
55.0
55.0
(67.0)
781.7
729.0
30.5
495.0
495.0
(32.1)
194.61
45.00
1.88
259.49
60.00
2.51
E: MOSL Estimates
MOTILAL OSWAL
6
FY06
4Q
Net Sales
Change (%)
Dividend
Dividend (%)
Dividend Yield (%)
262
(Rs Million)
FY06
1Q
7,458.5 6,300.0 26,255.2 28,650.0
17.4
10.9
18.4
9.1
30 June 2006
263
SECTOR: HOSPITALITY
Asian Hotels
BUY - Rs540
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
3,284.9
3,500.0
4,225.6
567.0
665.1
1,079.7
24.9
29.2
47.4
21.7
18.5
11.4
18.4
19.4
26.2
19.8
23.8
29.6
Net Sales
Change (%)
662.1
21.9
1,040.6
37.7
759.4
14.7
3,284.9
27.3
3,500.0
6.5
EBITDA
Change (%)
As % of sales
242.8
42.0
36.7
452.3
62.3
43.5
324.4
33.60
42.7
1,258.6
39.8
38.3
1,470.0
16.8
42.0
50.1
51.4
3.5
-
43.0
53.9
8.3
-
41.0
52.0
1.0
-
191.6
210.0
14.1
-
140.0
209.5
5.0
-
PBT
Tax
144.8
50.7
363.7
135.5
232.4
76.6
871.1
304.1
1,125.5
460.4
Reported PAT
Adjusted PAT
Change(%)
94.1
94.1
214.7
228.2
228.2
89.7
155.8
155.8
65.6
567.0
567.0
102.5
665.1
665.1
17.3
257.18
100.00
1.85
321.48
125.00
2.31
Rising tourist arrivals continue to benefit Asian Hotels. AprilMay 2006 saw tourist arrivals in India soar 20% YoY. Demand
for rooms across India is expected to grow @ 16-20% p.a.
over the next 4 years.
Interest
Depreciation
Other Income
Major developments: The company is implementing a Rs500m
capex plan to renovate the Hyatt Residency, Delhi. This will
be funded by internal accruals. This is likely to impact the
availability of inventory in FY07. However, post renovation,
the Delhi property ARR (average room rent) is expected to
increase up to Rs12,000/night as compared to Rs8,400/night
currently.
•
In 1QFY07, we expect net sales of Rs759m, up 14.7% YoY, and
PAT of Rs155.8m, up 65.6% YoY.
•
Keeping in view the renovation at the Delhi property we are
downgrading our FY07 revenue estimate to Rs3.5b (earlier
estimated at Rs3.73b) up 6.5% YoY and PAT to Rs665m (earlier
estimated at Rs842m) up 17.3% YoY.
•
Asian Hotels
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
FY07
FY06 FY07E
At CMP, the stock trades at 18.5x FY07E EPS of Rs29.2 and
11.4x FY08E EPS of Rs47.4. We maintain a BUY on the stock
with a two year price target of Rs750 (15.8x FY08E EPS & 25x
FY07E EPS).
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
264
7
30 June 2006
265
SECTOR: CAPITAL GOODS
Atlas Copco
HOLD - Rs660
30 June 2006
YEAR
END
12/05A
12/06E
12/07E
•
•
Atlas Copco
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E DECEMBER
CY05
2Q
5,699
6,838
8,206
511
665
816
22.7
29.5
36.2
29.4
22.4
18.2
27.4
28.4
27.5
30.5
36.6
36.0
Net Sales
Change (%)
1,415.0
65.5
EBITDA
Change (%)
As % of sales
301.1
111.4
21.3
331.1
34.0
19.6
12.9
49.6
9.0
-
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Atlas Copco India Ltd (ACIL) serves user sectors - mainly
infrastructure and construction - which are flush with orders.
We estimate ACIL's revenues to grow 24% over CY06-08. Also
we expect its other two user segments -- mining and CNG
petrol pumps - to boom by CY09.
Interest
Depreciation
Other Income
Major Developments: Atlas Copco's user sectors - mainly
infrastructure and construction - continue to display robust
growth. Atlas Copco plans to introduce Z-series oil-free rotary
screw air compressors for the food & beverages and pharma
segments.
•
In 2QCY06, we expect revenues of Rs1.68b, up 18.7% YoY,
and PAT of Rs175m, up 10% YoY.
•
For CY06, we expect net sales of Rs7.11b up 20% YoY and PAT
of Rs666m, up 30% YoY.
•
At CMP of Rs660, the stock trades at 22x CY06E EPS of Rs29.5
and 18x CY07E EPS of Rs36.2. Our price target is Rs725 (20x
CY07E EPS). We recommend existing investors to HOLD. We
recommend fresh buying at Rs600 levels.
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%) *
Dividend Yield (%)
E: MOSL Estimates
* Adjusted for Bonus
MOTILAL OSWAL
266
8
CY06
1Q
CY06
CY05 CY06E
1,687.2 1,680.0
28.8
18.7
5,698.5
42.1
6,838.2
20.00
320.0
6.3
19.0
1,023.8
114.2
18.0
1,322.1
31.3
19.3
9.1
48.0
2.0
-
15.0
50.0
5.0
-
50.1
196.4
50.9
(5.6)
53.6
217.9
40.0
-
247.6
88.5
276.0
99.3
260.0
85.0
828.2
322.6
1,090.7
425.4
159.1
159.1
56.9
176.7
176.7
45.7
175.0
175.0
10.0
505.6
511.2
29.2
665.3
665.3
30.1
67.60
30.00
1.00
101.07
40.00
2.11
30 June 2006
267
SECTOR: TYRES
BOOK PROFIT - Rs572
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
•
•
•
•
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
6,200.2
8,355.0
11,049.0
699.7
742.5
1,155.2
36.2
38.4
59.8
15.8
14.9
9.6
23.8
21.4
26.2
21.8
19.1
24.7
Net Sales
Change (%)
1,506.3
59.9
EBITDA
Change (%)
As % of sales
304.1
107.4
20.2
461.6
7.5
24.7
22.7
63.5
8.7
-
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
BIL is the largest manufacturer-exporter of special application
OTR (off-the-road) tyres for the agriculture, forestry and
construction sectors. Global OTR tyre market is estimated to
be $7.75b, ~10% of the total tyres market, and is growing at
5% p.a.
Major developments: Balkrishna has Rs5b capex plan over
next 3-4 years to raise tyre capacity from 60,000 tpa to
100,000 tpa. In FY06, it raised FCCBs worth USD40 million to
part finance the same.
Following capacity expansion, BIL plans to increase tyre
production from 41,000 tons in FY06 to 55,000 tons in FY07
and about 72,000 tons in FY08.
PAT of Rs155m, up 3.2% YoY.
We expect net sales of Rs8.35m, up 34.8% YoY and PAT of
Rs742m, up 6.1% YoY.
At CMP, the stock trades at 14.9x FY07E EPS of Rs38.4 (post
part FCCB conversion) by and 9.6x FY08E EPS of Rs59.8. We
recommend profit booking.
MOTILAL OSWAL
30 June 2006
Interest
Depreciation
Other Income
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
268
9
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
1,870.5 1,852.6
20.3
23.0
6,200.2
27.0
8,355.0
34.8
342.7
12.7
18.5
1,394.7
23.6
22.5
1,548.2
11.0
18.5
30.3
76.1
23.2
8.6
32.5
87.5
8.7
-
117.3
273.3
58.0
(3.3)
130.0
350.0
50.0
-
226.6
76.4
369.8
131.6
231.4
76.4
1,058.8
367.8
1,118.2
375.7
150.2
150.2
136.2
238.2
246.8
(0.8)
155.0
155.0
3.2
691.0
694.3
22.7
742.5
742.5
6.1
212.0
100.0
1.7
218.0
100.0
1.7
30 June 2006
269
SECTOR: PAPER
BUY - Rs101
30 June 2006
YEAR
END
06/05A
06/06E
06/07E
•
•
•
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E JUNE
17,906.6
20,093.5
22,094.0
1,680.9
2,090.7
2,700.0
10.3
12.8
16.6
9.8
7.9
6.1
11.5
12.7
14.6
11.1
11.5
12.6
Net Sales
Change (%)
4,723.4
(11.9)
5,121.5 6,250.0 17,906.6 20,093.5
(12.8)
12.2
EBITDA
Change (%)
As % of sales
1,108.9
3.4
23.5
1,351.3
26.4
1,506.7
Interest
Depreciation
Other Income
269.7
350.9
45.2
-
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Demand for paper continues to be robust. Bilt's cost cutting
drive in all its key operational areas has resulted in stable
EBITDA margins. Bilt's Rs13b capex plan to increase paper
capacity to 800,000 tpa by FY08 are on track.
Major Developments: Bilt had successfully issued zero-coupon
FCCBs of US$60m a five-year bond in the previous quarter. It
plans to partially prepay the existing FCCBs. The conversion
price of the FCCB is Rs183/share.
As part of its backward integration strategy, Bilt is in the
process of acquiring Malaysian paper and pulp company, Sabah
Forest Industries for $261m. SFI has a paper capacity of
144,000 tons and a pulp capacity of 120,000 tons.
•
In 4QFY06, net sales are likely to be Rs6.25b, up 32% YoY, and
PAT Rs617.5m, up 53% YoY.
•
For FY06, we expect sales of Rs20b, up 12% YoY, and PAT
Rs2.09b, up 25% YoY, on the back of slightly higher EBITDA
margin of 25.7% and lower interest cost.
•
Dividend
Dividend (%)
Dividend Yield (%)
30 June 2006
FY06
3Q
FY06
FY05 FY06E
24.1
4,503.2
6.3
25.1
5,168.0
14.8
25.7
249.7
415.6
21.8
-
249.6
500.2
37.9
-
1,104.0
1,430.9
96.5
-
980.0
1,650.0
100.0
-
533.5
128.8
707.8
147.2
794.8
177.3
2,064.8
383.9
2,638.0
544.3
404.7
404.7
8.4
560.6
560.6
-
617.5
617.5
1,680.9
1,680.9
25.6
2,093.7
2,090.7
24.6
406.07
25.00
2.47
408.07
25.00
2.47
E: MOSL Estimates
Note: 3QFY06 and 4QFY06 numbers are consolidated numbers and hence are not
strictly comparable
At CMP, the stock trades at 8x FY06E EPS of Rs12.8 and 6x
FY07E EPS of Rs16.6. We maintain a BUY with a price target
of Rs180.
MOTILAL OSWAL
FY05
4Q
MOTILAL OSWAL
270
10
30 June 2006
271
SECTOR: AIR-CONDITIONING
Blue Star
BUY - Rs601
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
•
•
•
Blue Star
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07E
FY06 FY07E
1QE Full year Full Year
11,746
15,034
19,244
489
642
835
27.3
35.9
46.6
22.0
16.8
12.9
30.5
33.9
36.7
33.1
35.3
38.7
Net Sales
Change (%)
2,300
28.9
3,982
27.4
2,944
28.0
11,746
27.6
15,034
28.0
116
53.4
5.1
398
54.2
10.0
141
21.3
4.8
867
49.8
7.4
1,087
25.4
7.2
Interest
Depreciation
Other Income
9
35
1
0
19
45
18
0
14
41
1
0
57
159
41
0
84
188
52
0
PBT
Tax
Tax / PBT (%)
73
23
31
353
99
28
87
23
26
691
202
29
867
225
26
Reported PAT
Adjusted PAT
Change (%)
51
51
39.9
254
254
60.4
65
65
28.1
489
489
39.4
642
642
31.2
216
120
270
150
2.5
EBITDA
Change (%)
EBITDA margin (%)
Blue Star is a market leader in central air-conditioning
systems, and an excellent play on the 4 mega trends of IT/
ITeS, retail & entertainment, SEZs and cold chain
infrastructure. We expect Blue Star to sustain topline growth
of 28% and EPS CAGR of 30% over the next 3 years.
Major developments: Blue Star is reportedly in talks with
all leading retailers (including Reliance Retail) to strengthen
its commercial refrigeration business. The company claims a
50% growth potential in this segment, which currently
accounts for about 15% of sales.
Copper prices have shot up by almost 50% QoQ and by over
100% YoY. Copper forms about 2% of sales. This implies a
potential 200bps dip in margins unless compensated by price
hikes/contingency reserve. We expect the latter to be the
case. Still, we have factored in a 30bps dip in margins YoY.
In 1QFY07, we expect net sales of Rs2.94b, up 28% YoY, and
PAT of Rs65m, up 28% YoY.
For FY07, our initial estimates are unchanged - net sales of
Rs15b, up 28% YoY, and PAT Rs642m, up 31% YoY.
At CMP, the stock trades at a PE of ~17x FY07E. Our target PE
for the stock is 20x. We maintain a BUY on the stock with a
1-year target price of Rs710.
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
272
11
30 June 2006
273
SECTOR: TYRES
CEAT
BUY - Rs81
30 June 2006
YEAR
END
03/05A
03/06A
03/07E
CEAT
NET SALES
(RS M)
PAT
(RS M)
CASH EPS
(RS)
CASH P/E
(X)
ROE
(%)
ROCE
(%)
15279.9
17379.2
19725.0
-18.7
3.7
10.0
5.8
5.0
5.4
14.1
16.2
15.1
-0.3
0.1
0.1
5.6
6.7
5.7
•
•
the price hikes would be visible in 2QFY07.
Y/E MARCH
EBITDA
Change (%)
As % of sales
123.5
(1.4)
3.1
187.9
108.3
3.9
134.5
8.9
3.0
599.7
70.0
3.5
649.0
8.2
3.3
Interest
Depreciation
Other Income
156.3
53.7
62.9
-
153.7
57.7
120.0
-
150.0
53.7
50.0
-
634.0
224.5
308.5
-
600.0
235.0
200.0
-
PBT
Tax
(23.6)
(3.8)
96.5
48.7
(19.2)
-
49.7
46.0
14.0
4.0
(19.8)
(19.8)
(635.1)
47.8
47.8
168.5
(19.2)
(19.2)
(3.0)
3.7
3.7
NA
10.0
10.0
170.3
-
102.94
20.00
2.47
Reported PAT
Adjusted PAT
Change(%)
•
In 1QFY07, we expect revenues of Rs4.5b, up 11.7% YoY, and
a loss of Rs19.2m, against a loss of Rs19.8m last year.
•
For FY07, we expect net sales of Rs19.7b, up 13.5 % YoY, and
Dividend
Dividend (%)
Dividend Yield (%)
•
At CMP of Rs81, the stock trades at 15x FY07E EPS of Rs5.4.
We recommend BUY on expectations of a sharp turnaround
2QFY07 onwards.
E: MOSL Estimates
MOTILAL OSWAL
274
12
FY07
FY06 FY07E
4,027.7
16.3
Ceat has planned capex of Rs500m to cater to the domestic
and export market. Ceat plans to expand capacity at its Nasik
radial tyre plant from 40,000 tyres per month to 65,000. It is
also setting up a 20,000 radial tyres plant in Sri Lanka.
30 June 2006
FY06
4Q
Net Sales
Change (%)
•
MOTILAL OSWAL
(Rs Million)
FY06
1Q
4,773.6 4,500.0 17,379.2 19,725.0
14.0
11.7
13.7
13.5
30 June 2006
275
SECTOR: HOSPITALITY
BUY - Rs139
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
656.4
1520.8
1672.9
62.6
193.4
228.3
6.0
9.9
11.7
23.3
14.0
11.8
17.1
20.6
19.5
16.1
14.6
15.4
Net Sales
Change (%)
91.4
25.2
249.0
35.1
276.3
-
656.4
31.8
1,520.8
-
EBITDA
Change (%)
As % of sales
12.9
140.6
14.2
106.3
39.3
42.7
115.8
41.9
221.9
125.0
33.8
620.8
40.8
Interest
Depreciation
Other Income
26.3
11.0
2.1
(0.5)
27.2
11.7
4.4
(32.1)
50.0
22.5
2.5
-
104.9
45.9
7.7
(33.7)
246.2
90.0
10.0
4.0
(22.3)
(17.9)
39.7
24.0
45.8
15.1
45.2
16.2
294.6
97.2
(4.4)
(4.9)
93.1
15.7
47.8
(1.2)
30.7
30.7
-
29.0
62.6
162.9
197.4
193.4
-
-
-
The hospitality sector continues to do well. Demand for rooms
in Chennai as well as Jaipur continues to be good. ARR at
these properties has increased 20% YoY during the period MarJune 2006 resulting in improved performance.
Major developments: The company is in the process of
acquiring two properties of EIH limited viz, The Oberoi Cecil
(Shimla) and Trident Hilton (Bhubhaneshwar) and merging
Indus Hotels Corporation with itself. This will increase its
room inventory to 855 in FY07 against 237 in FY05.
•
In 1QFY07 we expect net sales of Rs276m, and a PAT of
Rs30.7m.
•
In FY07, we expect sales of Rs1.52b, up 131.7% and PAT of
•
At CMP, the stock trades at 14x FY07E EPS of Rs9.9 and 11.8x
FY08E EPS of Rs11. We recommend a BUY with a price target
of Rs202.
MOTILAL OSWAL
30 June 2006
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
Note: Q1FY07 & FY07 are consolidated numbers with EIH Ltd and Indus Hotels Co-operation
MOTILAL OSWAL
276
13
30 June 2006
277
SECTOR: POWER EQUIPMENT
EMCO
NEUTRAL - Rs429
30 June 2006
YEAR
END
03/06E
03/07E
03/08E
•
EMCO
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
4053.9
5500.0
7000.0
190.9
343.1
450.9
24.2
41.8
53.0
17.76
10.3
8.1
13.8
19.4
18.8
15.9
21.0
21.0
Net Sales
Change (%)
622.7
37.2
1,698.5
122.1
850.0
36.5
4,053.9
71.8
5,500.0
35.7
EBITDA
Change (%)
As % of sales
81.1
42.4
13.0
152.4
79.3
9.0
105.0
29.5
12.4
458.0
48.8
11.3
705.0
53.9
12.8
Interest
Depreciation
Other Income
27.4
13.5
-
32.0
15.4
0.1
-
30.0
15.0
-
117.5
56.5
0.1
-
120.0
70.0
0.1
-
PBT
Tax
40.2
5.2
105.1
60.5
60.0
20.0
284.1
93.2
515.1
172.0
Reported PAT
Adjusted PAT
Change(%)
35.0
35.0
272.5
44.6
44.6
43.4
40.0
40.0
14.3
190.9
190.9
98.8
343.1
343.1
79.7
26.55
30.00
0.70
37.01
40.00
0.93
Major developments - EMCO is planning to set up a 135mw
coal-based power plant at Chandrapur. The initial project
cost works out to Rs5.5b, 30% funded through equity and the
balance through debt @ 9%. 60% of the power generated would
be sold on PPA basis at Rs2.25 per unit, while the rest would
be on merchant basis. The company plans to float an SPV for
this project, wherein it would invest Rs1.6b towards equity
contribution. It plans to raise the equity through preferential
allotment of 3 lac warrants to promoters at Rs725 and the
balance through a $50m GDR/FCCB.
•
Its current order book is at Rs4b.
•
In 1QFY07, EMCO is expected to report net sales Rs850m, up
37% YoY, and PAT Rs40m, up 14%.
•
In FY07, EMCO is expected to post net sales of Rs5.5b, up
36%, and PAT of Rs343m up 80%.
•
The stock trades at 10x FY07E EPS of Rs42 and 8x FY08E EPS
of Rs53. The company's foray into power generation should
lead to significant equity expansion and EPS dilution, as
returns from the project start only 3 years hence. We remain
NEUTRAL on the stock.
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
278
14
FY07
FY06 FY07E
30 June 2006
279
SECTOR: AUTO ANCILLARY
Enkei Castalloy
BUY - Rs338
30 June 2006
YEAR
END
3/06A
3/07E
3/08E
•
Enkei Castalloy
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
1,227
2,250
3,500
82
132
238
16.4
23.9
43.2
20.7
14.1
7.8
33.2
23.2
29.5
17.1
19.7
26.1
Net Sales
Change (%)
216.5
78.0
403.3
91.0
450.0
107.9
1,227.1
83.6
2,250.0
83.4
EBITDA
Change (%)
As % of sales
47.0
48.0
21.7
65.2
33.0
16.2
72.0
53.2
16.0
222.7
41.7
18.1
371.6
66.9
16.5
Interest
Depreciation
Other Income
9.8
11.5
0.9
-
16.0
20.3
6.4
-
20.0
22.5
1.0
-
49.8
54.9
8.5
-
90.3
83.7
5.0
-
PBT
Tax
26.6
6.7
35.3
22.3
30.5
7.0
126.5
44.7
202.6
70.9
Reported PAT
Adjusted PAT
Change(%)
19.9
19.9
37.0
13.0
13.0
(124.0)
23.5
23.5
18.1
81.8
81.8
38.7
131.7
131.7
61.0
8.44
15.00
0.4%
9.28
15.00
0.4%
Enkei Castalloy Ltd (ECL), a 38% subsidiary of Enkei
Corporation Japan, is a leading manufacturer of aluminum
alloy castings for the auto sector. Recently, it has launched
alloy wheels, which have huge domestic and export potential.
ECL has a 50% market share with Bajaj Auto and Hero Honda
for cylinder heads. It also meets 100% of Maruti's manifold
requirements for certain models.
•
Major development: The board has approved preferential
allotment of 250,000 equity shares each to Prudential ICICI
AMC Ltd and Minivet Ltd, Mauritius, at a premium of Rs390.
•
In 1QFY07, we expect revenues of Rs450m, up 108% YoY and
a PAT of Rs23.5m, up 18% YoY. Depreciation and interest are
set to double from Rs11.5m to Rs22.5m and Rs9.8m to Rs20m,
respectively.
•
For FY07, we expect net sales of Rs2.25b up 83.4% YoY and
PAT of Rs131.7m, up 61% YoY.
•
At CMP of Rs338, the stock trades at 14x FY07E EPS of Rs23.9
and 8x FY08E EPS of Rs43.2. We maintain BUY with a target
of Rs520 (12x FY08E EPS).
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
280
15
30 June 2006
281
SECTOR: INFRASTRUCTURE
Era Construction
BUY - Rs291
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
•
•
•
•
•
Era Construction
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
3,107.6
7,000.0
11,000.0
264.0
630.0
990.0
14.2
27.4
43.0
20.5
10.6
6.8
24.9
37.8
31.4
24.7
32.3
34.5
Net Sales
Change (%)
526.0
73.4
EBITDA
Change (%)
As % of sales
52.0
93.3
9.9
214.6
442.0
20.7
Interest
Depreciation
Other Income
19.7
6.3
2.8
-
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Investments in infrastructure are likely to touch Rs6.2 trillion
over the next five years. Era Constructions (I) Ltd (ECIL) with
its well diversified portfolio is well placed to take advantage
of this opportunity.
Major developments: ECIL has set up a 100% EOU for export
of structural and allied designs and plans to undertake the
entire designing assignments, all for exports. Contribution
to revenues from this division in FY07 is likely to be about
Rs400m.
ECIL's 75% subsidiary Era Metal Building Systems is setting up
a 40,000 tpa plant in Uttaranchal which is expected to begin
commercial production by Sep-Oct 2006.
Recently the company bagged orders from NALCO, BHEL and
Rail Vikas Nigam Ltd for civil structural and architectural work.
The total value of these orders combined with the earlier
orders in hand is Rs20b.
In 1QFY07, we expect net sales of Rs 1.27b, up 141% YoY, and
For FY07, we expect net sales of Rs7b, up125% YoY, and PAT
of Rs630m up139% YoY.
6.8x FY08E EPS of Rs43. We maintain a BUY of the stock with
a one-year target of Rs400 and two-year target price Rs750
(17x FY08E).
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
282
16
FY06
4Q
FY07
FY06 FY07E
1,038.6 1,270.0
94.7
141.4
3,107.6
98.8
7,000.0
125.3
180.9
247.9
14.2
488.8
246.9
15.7
1,040.0
112.8
14.9
32.2
11.4
12.0
-
32.2
11.5
10.0
-
101.4
34.7
21.6
-
160.0
50.0
10.0
-
28.8
7.8
182.9
60.0
147.2
47.1
374.3
110.3
840.0
210.0
21.0
21.0
129.1
123.0
123.0
459.4
100.1
100.1
376.9
264.0
264.0
384.3
630.0
630.0
138.7
31.51
15.00
0.52
38.95
15.00
0.52
30 June 2006
283
SECTOR: WELDING
Esab India
HOLD - Rs349
30 June 2006
YEAR
END
12/05A
12/06E
12/07E
Esab India
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E DECEMBER
CY05
2Q
CY06
1Q
CY06
CY05 CY06E
2,382
2,800
3,250
367
408
480
23.9
26.5
31.2
14.6
13.2
11.2
107.6
61.6
46.2
115.4
91.9
69.8
Net Sales
Change (%)
603.80
34.24
629.10
16.28
700.00 2,381.60 2,800.00
15.93
26.76
17.57
EBITDA
Change (%)
As % of sales
152.60
55.40
25.27
136.00
14.09
21.62
155.40
1.83
22.20
532.30
34.62
22.35
630.00
18.35
22.50
(3.90)
11.50
8.00
-
1.00
10.70
11.90
-
1.00
13.00
9.00
-
(9.50)
44.60
39.30
(45.30)
4.00
50.00
40.00
-
PBT
Tax
153.00
52.90
136.20
46.80
150.40
50.53
581.80
184.70
616.00
208.01
Reported PAT
Adjusted PAT
Change(%)
100.10
100.10
140.01
89.40
89.40
19.04
99.87
99.87
(0.23)
397.10
367.20
59.65
407.99
407.99
11.11
Dividend
Dividend (%)
Dividend Yield (%)
448.24
260.00
7.45
104.18
25.00
1.72
E: MOSL Estimates
* Special dividend
* Cum special dividend of Rs26/share
•
•
•
•
•
•
(Rs Million)
NET SALES
(RS M)
High level of construction activity in all sectors should drive
demand for welding products.
Major developments: Esab is working on technology transfers
and related licences for equipments and consumables from
international affiliates, and is setting up a new manufacturing
unit near Chennai for equipment division. It is also setting
up a unit in Chennai for manufacture of flux cored wire in
collaboration with Esab AB Sweden.
Rise in prices of special quality steel being used by the
company from $650/ton to $750-800/ton over the last six
months could affect margins.
In 2QCY06, Esab is likely to report net sales of Rs700m up
16% YoY, and PAT flat Rs100m.
We have downgraded estimates for CY06, due to slowdown
in consumables business and lower margins. We now expect
net sales of Rs2.8b (earlier Rs2.98b), up 18% YoY, and PAT of
Rs408m (earlier Rs452m), up 11% YoY.
At CMP, the stock trades at 13x CY06 EPS of Rs26.5 and 11x
CY07 EPS of Rs31.2. We estimate the fair value for the stock
at Rs400. We maintain HOLD considering the slowdown in
consumables growth and uncertainty over steel prices.
MOTILAL OSWAL
30 June 2006
Interest
Depreciation
Other Income
MOTILAL OSWAL
284
17
30 June 2006
285
SECTOR: POWER EQUIPMENT
Genus Overseas
BUY - Rs169
30 June 2006
YEAR
END
03/05A
03/06A
03/07E
•
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4QE
1317.1
2121.0
3550.0
73.8
142.5
271.8
7.3
13.1
25.1
23.3
12.9
6.7
27.8
28.4
36.4
18.4
19.1
25.8
Net Sales
Change (%)
374.4
12.4
1,122.1
294.1
640.0
70.9
2,121.0
61.0
3,550.0
67.4
EBITDA
Change (%)
As % of sales
38.6
18.4
10.3
128.3
167.8
11.4
70.0
81.3
10.9
261.7
70.5
12.3
519.0
98.3
14.6
9.4
5.1
1.3
-
29.1
10.0
2.6
-
11.0
10.0
1.0
-
70.8
25.3
6.5
-
95.0
60.0
4.4
-
PBT
Tax
25.4
4.4
91.8
11.8
50.0
12.0
172.1
24.6
368.4
91.6
Reported PAT
Adjusted PAT
Change(%)
21.0
21.0
38.2
80.0
80.0
139.5
38.0
38.0
81.0
147.5
147.5
87.2
276.8
276.8
87.7
18.35
15.00
0.89
30.58
25.00
1.48
Major Developments: Genus's planned Rs491m preferential
allotment to Goya, the subsidiary of private equity firm
ChrysCapital, has not gone through. Instead, it has opted for
long-term debt from IDFC @ 9.5%.
•
Demand for meters remains robust given government focus
on strengthening the electricity distribution system.
•
Genus's current order book stands at Rs5b.
•
In 1QFY07, we expect revenues of Rs640m, up 71% YoY, and
•
•
Genus Overseas
Interest
Depreciation
Other Income
Dividend
Dividend (%)
Dividend Yield (%)
At CMP of Rs169, the stock trades at 6.7x FY07E EPS of Rs25.1.
We maintain BUY with a target of Rs308 (12x FY07E EPS).
E: MOSL Estimates
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
286
18
FY07
FY06 FY07E
30 June 2006
287
SECTOR: POWER
GIPCL
HOLD - Rs53
30 June 2006
YEAR
END
03/06E
03/07E
03/08E
•
GIPCL
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
7559
7600
7600
1011
1080
1010
6.7
7.1
6.7
8.0
7.4
8.0
10.9
10.7
9.3
11.3
10.2
9.3
Net Sales
Change (%)
1,882.1
(5.8)
EBITDA
Change (%)
As % of sales
746.1
(16.6)
39.6
555.1
(12.5)
30.6
Interest
Depreciation
Other Income
151.9
227.8
41.3
230.0
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Gujarat Industries Power Company (GIPCL) continues to report
steady performance, reporting over 80% PLF for its three
stations.
•
Major developments: None. GIPCL's next trigger for earnings
growth would come only after its 4th plant is commissioned
in FY09.
•
For 1QFY07, we expect revenues of Rs1.9b, up 1%, and APAT
Rs294m, up 9%.
•
For FY07, we expect revenues to be flat at Rs7.6b, and APAT
Rs1.1b, up 7% YoY.
•
At CMP, the stock trades at a PE of about 7x FY07E and FY08E
EPS and Price/book of 0.8x FY07E and 0.7x FY08E.
•
From current levels, the stock may deliver 15% returns with
low risk. However, GIPCL's business is an annuity play with
no major developments. Hence, we are discontinuing
coverage of this stock.
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
288
19
FY06
1Q
FY06
4Q
FY07
FY06
FY07
1,811.3 1,900.0
4.3
1.0
7,559.1
1.5
7,600.0
0.5
700.0
(6.2)
36.8
2,773.0
(10.0)
36.7
2,640.0
(4.8)
34.7
107.7
228.2
77.7
(28.0)
150.0
221.1
45.0
-
553.3
914.9
212.7
202.0
560.0
900.0
180.0
-
637.7
214.6
268.9
87.1
373.9
80.0
1,719.5
574.9
1,360.0
280.0
423.1
270.5
11.9
181.8
200.4
4.1
293.9
293.9
8.7
1,144.6
1,010.6
19.2
1,080.0
1,080.0
6.9
213.26
12.50
2.35
255.92
15.00
2.82
30 June 2006
289
SECTOR: DIAMOND & JEWELLERY
BUY - Rs114
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07E
FY06 FY07E
2287.2
2950.0
4220.0
271.8
293.3
403.2
10.1
9.2
13.4
11.4
12.4
8.5
15.4
11.2
14.2
16.9
14.3
18.4
Net Sales
Change (%)
494.0
39.5
559.4
57.9
650.0
31.6
2,287.2
26.4
2,950.0
29.0
EBITDA
Change (%)
As % of sales
45.9
(9.1)
9.3
61.0
256.7
10.9
67.0
46.0
10.3
288.1
33.9
12.6
355.0
23.2
12.0
4.6
4.7
9.9
-
6.6
5.8
10.5
-
10.0
6.0
10.0
-
21.9
20.5
76.4
-
16.0
25.0
50.0
-
46.5
1.7
59.1
5.1
61.0
6.5
322.2
15.9
364.0
32.8
44.8
36.1
(29.5)
54.0
47.3
41.5
54.5
47.0
30.2
306.3
271.8
12.2
331.2
276.6
1.8
60.87
20.00
1.75
84.55
25.00
2.18
Goldiam is a leading exporter of studded jewellery to
international retail houses like Wal-mart, J C Penney and
Zales. Its own retail venture in India holds promise.
Interest
Depreciation
Other Income
Extraordinary Items
Major developments: Goldiam has increased stake in Goldiam
HK, its China JV, to 50.27% w.e.f. 4th April 2006. Its first
retail store for "Ola" brand of silver fashion jewellery was
launched in Atria Mall, Mumbai on 30th June 2006.
•
•
•
and 8.5x FY08E EPS of Rs13.4. We recommend BUY with a
1-year target of Rs138 (15x FY07E) and 2-year target of Rs201
(15x FY08E).
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
* Adjusted for Bonus
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
290
20
30 June 2006
291
SECTOR: PAINTS
Goodlass Nerolac Paints
BUY - Rs730
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
•
Goodlass Nerolac Paints
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07E
FY06 FY07E
1QE Full year Full Year
10,096
12,716
14,599
997
1,185
1,467
39.1
44.0
54.5
18.7
16.6
13.4
30.8
24.2
25.3
29.7
29.8
31.8
Net Sales
Change (%)
2,266
18.1
2,337
16.5
2,797
23.5
10,096
15.0
12,716
26.0
370
34.0
16.3
295
10.4
12.6
450
21.9
16.1
1,568
19.5
15.5
1,894
20.8
14.9
1
63
24
0
3
93
59
14
2
93
27
0
8
318
192
393
13
374
218
0
PBT
Tax
Tax / PBT (%)
330
113
34
272
103
38
382
126
33
1,827
611
33
1,725
569
33
PAT
Share of associates
Minority interest
217
14
(0)
169
14
(0)
256
6
(1)
1,216
54
(1)
1,156
23
(6)
Reported PAT
Adjusted PAT
Change (%)
230
230
34.5
183
174
8.3
263
263
14.4
1,271
997
14.6
1,185
1,185
18.8
510
200
391
150
2.1
EBITDA
Change (%)
EBITDA margin (%)
Major developments: On 4 April 2006, there was a fire in
the company's unit at Jainpur near Kanpur, Uttar Pradesh.
The main paint line was burnt down, and there was also loss
of raw material. The company claims no P&L impact as it is
fully insured.
Interest
Depreciation
Other Income
In 1QFY07, we expect Goodlass's numbers to reflect merger
with Polycoat Powders effective 1 April 2006. However, the
financials of its Malaysian subsidiary are still unclear.
Crude price is up 13% during the quarter, which could exert
some pressure on margins. In end-June, Goodlass hiked
product prices 2.5-3%, which should have an impact
in 2QFY07.
•
Based on the FY06 Annual Report, capex during FY06 was
higher - and investments lower - than our estimate.
Accordingly, we have trimmed Goodlass's other income for
FY07E and FY08E by about Rs20m, bringing down EPS by Re1
for both the years.
•
At CMP, the stock trades at 17x FY07E EPS of Rs44. Our longterm target PE for the stock is 23x. We maintain a BUY on
the stock with a 1-year target price of Rs1,027.
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
292
21
30 June 2006
293
SECTOR: TEA
Goodricke Group
BOOK PROFIT - Rs71
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E DECEMBER
CY05
2Q
CY06
1Q
CY06
CY05 CY06E
1,924.4
2,098.4
2,330.0
32.2
37.6
152.1
1.5
1.7
7.0
40.7
10.1
4.8
5.6
19.2
6.0
7.0
16.4
Net Sales
Change (%)
384.9
19.7
339.7
0.1
400.0
3.9
2,098.4
9.0
2,330.0
11.0
EBITDA
Change (%)
As % of sales
(2.0)
96.7
(0.5)
(182.8)
1.7
(53.8)
10.0
600.0
2.5
73.0
(2.9)
3.5
218.4
9.4
Interest
Depreciation
Other Income
8.6
12.5
12.2
-
5.6
12.3
4.4
-
5.6
12.5
5.0
-
31.2
55.3
58.8
-
35.0
55.3
40.0
-
(10.9)
(1.5)
(196.3)
0.4
(3.1)
-
45.3
7.7
168.1
16.0
(9.4)
(9.4)
86.1
(196.7)
(196.7)
(7.4)
(3.1)
(3.1)
67.0
37.6
37.6
16.8
152.1
152.1
418.0
17.28
8.00
1.13
32.40
15.00
2.12
30 June 2006
YEAR
END
12/04A
12/05A
12/06E
•
•
Goodricke Group
In CY06, we expect Goodricke's tea production at 23m kg
(22m kg in CY05). We have factored in a net sales realization
of Rs101/kg for CY06 (Rs91/kg in CY05).
Major Development : Like its British parent (the £178
Camellia Plc), Goodricke too plans to foray into horticulture.
Though its existing tea operations are mostly in Dooars and
Darjeeling (West Bengal), the company is looking at other
parts of India for the horticulture foray. It may even buy new
land for this business.
•
In 2QCY06, the company is expected to report net sales of
Rs400m, up 4% YoY, and loss of Rs3.1m, significantly lower by
67% YoY.
•
In CY06 we expect Goodricke to post net sales of Rs2.33b, up
11% YoY, and PAT of Rs152m, up 418% YoY.
•
At CMP, the stock trades at 10.1x CY06 earnings of Rs7. We
recommend profit booking on the stock.
MOTILAL OSWAL
30 June 2006
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
294
22
(Rs Million)
30 June 2006
295
SECTOR: CHLOR ALKALI
Gujarat Alkalies and Chemicals
Gujarat Alkalies and Chemicals
BUY - Rs159
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
9,441.0
10,841.8
11,412.0
1,978.5
2,228.9
2,507.7
26.9
30.3
34.1
5.9
5.2
4.7
28.4
24.8
22.3
23.9
25.3
27.2
The demand-supply for chlor-alkali products continues to
remain favorable. Demand for caustic soda/chlorine is growing
at 6% p.a. ECU price realization during June 2006 in the western
region is up by 6.2% MoM and 2% YoY at Rs24,700/ton.
Major Developments: GACL is set to enter into an agreement
with Nuon Netherlands, an energy company, to sell ~1m
certified emission reduction certificates (CER). This could
bring in additional revenue of ~Rs600m by 2012 for the
company. However, we have not considered these in our
future estimates.
•
In 1QFY07, we expect net sales of Rs2.32b, down 5.6%YoY,
and PAT of Rs397.1m, down 37.2% YoY.
•
For FY07, we expect net sales of Rs10.84b, up 14.8% YoY, and
PAT of Rs2.23b, up 12.7% YoY.
•
4.7x FY08E EPS of Rs34.2. We maintain BUY on the stock
with a price target of Rs200.
MOTILAL OSWAL
30 June 2006
FY06
4Q
Net Sales
Change (%)
2,464.0
36.0
2,327.2
(10.7)
2,327.2
(5.6)
EBITDA
Change (%)
As % of sales
1,196.8
101.5
48.6
868.0
(27.1)
37.3
868.0
(27.5)
37.3
3,848.9
(2.4)
40.8
4,420.2
12.1
40.8
Interest
Depreciation
Other Income
110.2
197.0
6.8
-
81.1
189.4
101.3
-
85.0
213.4
25.0
-
393.6
784.6
277.9
(0.8)
340.0
853.6
100.0
-
PBT
Tax
896.4
264.3
698.8
429.2
594.6
197.5
2,947.8
970.1
3,326.6
1,097.8
Reported PAT
Adjusted PAT
Change(%)
632.1
632.1
504.9
269.6
269.6
(43.9)
397.1
397.1
(37.2)
1,977.7
1,978.5
37.9
2,228.8
2,228.8
12.7
165.67
20.00
1.26
207.10
25.00
1.57
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
296
23
(Rs Million)
FY06
1Q
FY07
FY06 FY07E
9,441.0 10,841.8
4.6
14.8
30 June 2006
297
SECTOR: INFORMATION TECHNOLOGY
Helios & Matheson
Helios & Matheson
BUY - Rs132
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
(Rs Million)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07E
FY06 FY07E
2205.1
3824.4
4971.8
381.4
551.1
669.4
19.1
27.5
33.5
6.9
4.8
3.9
40.6
37.8
32.0
29.4
33.9
32.1
Net Sales
Change (%)
496.8
101.0
623.3
71.9
836.7
68.4
2,205.1
80.6
3,824.4
73.4
EBITDA
Change (%)
As % of sales
120.9
106.7
24.3
163.1
58.8
26.2
175.7
45.3
21.0
558.4
68.9
25.3
823.9
47.5
21.5
Interest
Depreciation
Other Income
9.7
29.9
-
5.7
32.8
-
10.0
39.0
5.0
-
31.3
122.5
8.5
-
40.0
174.0
20.0
-
PBT
Tax
81.3
4.7
124.5
11.6
131.7
16.8
413.1
31.7
629.9
78.8
Reported PAT
Adjusted PAT
Change(%)
76.6
76.6
181.6
112.9
112.9
88.8
114.9
114.9
50.0
381.4
381.4
105.4
551.1
551.1
44.5
22.65
10.00
0.76
33.98
15.00
1.14
As per an IDC study Indian IT exports are expected to register
a CAGR of 30% during FY04-08E. Industry trend is clients
moving towards a 2nd vendor to complement an already
existing top-tier company. This should help companies
like Helios.
Major Developments: None (arbitration proceedings relating
to vMoksha are likely to come up for hearing in the
near term).
•
In 1QFY07, net sales are expected to be Rs836.7m, up 68%
YoY, and PAT Rs115m, up 50% YoY.
•
For FY07E, Helios is expected to report sales of Rs3.8b, up
73% and PAT of Rs551m, up 45%.
•
NET SALES
(RS M)
Dividend
Dividend (%)
Dividend Yield (%)
At CMP, the stock trades at 4.8x FY07E EPS of Rs.27.5. We
maintain a BUY with price target of Rs330 (12x FY07E).
E: MOSL Estimates
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
298
24
30 June 2006
299
SECTOR: TEXTILE MACHINERY
Indian Card Clothing
BUY - Rs215
30 June 2006
YEAR
END
03/06E
03/07E
03/08E
•
•
•
•
•
•
•
Indian Card Clothing
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
471.7
517.5
572.5
93.8
92.3
112.6
20.6
20.3
24.7
10.4
10.6
8.7
13.7
13.0
15.1
18.3
17.0
19.2
Indian Card Clothing (ICC) is witnessing good demand for
cotton card clothing. However, sales of woolen card clothing
is on the decline in 1QFY07, leading to muted sales growth.
Major developments: ICC has declared a final dividend of
Rs2.50 per share for FY06 (interim dividend Rs10 per share).
The first phase of its expansion in Himachal Pradesh is
expected to commission in September 2006. The Rs150m
project will be eligible for tax benefits.
It has received occupancy certificate for 40,000 sq ft (total
50,000 sq ft) for its Powai property. Expected revenues from
the same are around Rs25m per annum. Part of the property
has been leased out in 1QFY07 itself.
In 1QFY07, we expect net sales of Rs113m, up 7% YoY, and
PAT Rs14m, down 21% YoY. The main reason for this is lower
margins due to lower sales of woolen card clothing.
We have downgraded our estimates for FY07. We now expect
net sales of Rs518m (earlier Rs569m), up 10% YoY, and PAT
Rs92m (earlier Rs119m), down 6% YoY.
At CMP, the stock currently trades at 11x FY07E EPS of Rs20.3.
We maintain BUY considering reasonable valuations, good
dividend yield and potential upside from land development
at Pimpri.
MOTILAL OSWAL
30 June 2006
FY06
4Q
Net Sales
Change (%)
105.2
12.2
116.8
(16.0)
112.5
6.9
471.7
0.1
517.5
9.7
EBITDA
Change (%)
As % of sales
17.6
60.0
16.7
2.1
(86.5)
1.8
9.0
(48.9)
8.0
58.0
(26.0)
12.3
69.9
20.5
13.5
3.2
10.2
(29.8)
3.9
26.9
(30.0)
4.5
15.0
-
14.1
83.2
(59.8)
21.0
75.0
-
PBT
Tax
54.4
7.1
55.1
10.1
19.5
5.6
186.9
33.3
123.9
31.6
Reported PAT
Adjusted PAT
Change(%)
47.3
17.5
(0.6)
45.0
19.5
(8.9)
13.9
13.9
(20.6)
153.6
98.3
(2.4)
92.3
92.3
(6.1)
Dividend
Dividend (%)
Dividend Yield (%)
64.16
125.00
5.81
64.16
125.00
5.81
E: MOSL Estimates
Interest
Depreciation
Other Income
MOTILAL OSWAL
300
25
(Rs Million)
FY06
1Q
FY07
FY06
FY07E
30 June 2006
301
SECTOR: CASTING-STEEL/ALLOY
Investment and Precision Castings
BUY - Rs1,023
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
Investment and Precision Castings
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
500.1
638.0
795.0
80.8
99.0
119.2
65.2
79.8
96.1
15.7
12.8
10.6
26.7
25.3
24.1
31.1
29.6
30.3
Net Sales
Change (%)
108.6
22.4
130.2
7.2
133.0
22.5
500.1
16.0
638.0
27.6
EBITDA
Change (%)
As % of sales
26.6
11.8
24.5
36.3
44.0
27.9
33.6
26.3
25.3
131.7
21.2
26.3
160.0
21.5
25.1
2.7
0.6
-
1.0
2.9
1.0
(0.2)
1.0
3.0
1.0
-
1.8
11.2
2.4
(1.2)
10.0
15.0
4.0
-
•
Major developments: The company continues to perform
well given the ongoing auto boom.
•
Its 100% EOU is expected to produce around 200 tons in FY07.
We expect EBITDA margins to be slightly lower than that
earned from current plant. However, the unit will enjoy
income tax exemption, and hence better PAT margins.
•
The company has declared 3:1 bonus (three shares for every
one held), and the shares are currently quoting cum bonus.
PBT
Tax
24.5
8.2
33.6
11.7
30.6
10.0
122.3
40.3
139.0
40.0
•
PAT Rs21m, up 26%.
•
In FY07, we expect net sales of Rs638m, up 28%, and PAT
Rs99m, up 22.5%.
Reported PAT
Adjusted PAT
Change(%)
16.3
16.3
13.2
21.9
21.7
92.0
20.6
20.6
26.4
82.0
80.8
24.7
99.0
99.0
22.5
•
At CMP, the stock trades at 13x FY07E EPS of Rs80 and 11x
FY08E EPS of Rs96. We maintain BUY with a price target of
Rs1,200 (15x FY07E).
12.50
90.00
0.88
15.28
110.00
1.08
MOTILAL OSWAL
30 June 2006
Interest
Depreciation
Other Income
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
302
26
30 June 2006
303
SECTOR: PHARMACEUTICALS
Ipca Laboratories
Ipca Laboratories
BUY-RS 260
30 June 2006
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
03/06A 7,542.3
03/07E 8,673.6
03/08E 10,148.2
636.9
862.4
1,065.4
25.5
34.5
42.6
10.2
7.5
6.1
16.5
19.0
19.6
13.6
16.0
17.5
Net Sales
Change (%)
2,085.7
19.6
EBITDA
Change (%)
As % of sales
427.8
70.9
20.5
255.1
20.5
14.2
29.0
54.8
2.9
-
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
YEAR
END
Discontinue coverage
•
•
Ipca's generic export realizations are likely to improve as it
gets into better molecules. Promotional market export sales
to CIS, Africa and South East Asia are likely to contribute
better to overall revenues and margins. However, its revenues
and profit in Q1FY07 are likely to be lower in comparison to
Q1FY06, which were unusually high due to spill-over from
Q4FY05 as a result of uncertainty over VAT.
Interest
Depreciation
Other Income
Major developments: Ipca's Dehradun plant began
commercial production from May 2006. It is setting up a new,
Rs600m plant at Indore in the SEZ area. This plant is to be
funded by internal accruals and is likely to begin commercial
production by the end of FY08.
•
For 1QFY07, we expect net sales of Rs 2b, down 4% YoY, and
PAT Rs194m, down 24% YoY.
Dividend
Dividend (%)
Dividend Yield (%)
•
For FY07, we expect sales of Rs8.67b, up 15% YoY, and PAT
Rs862m, up 35% YoY due to higher margins.
E: MOSL Estimates
•
FY08E EPS of Rs42.6. We recommend BUY on the stock with
a 1-year price target of Rs345 (10x FY07E) and 2-year price
target of Rs426 (10x FY08E).
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
304
27
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
1,800.0 2,000.0
13.7
(4.1)
7,542.3
11.4
8,673.6
15.0
335.0
(21.7)
16.8
1,145.0
(8.4)
15.2
1,452.8
26.9
16.8
43.4
64.4
6.9
-
42.5
65.0
4.8
-
140.9
242.6
19.5
-
170.0
270.0
20.0
-
346.9
91.2
154.2
(25.4)
232.3
38.3
781.0
144.1
1,032.8
170.4
255.7
255.7
74.1
179.6
179.6
14.4
194.0
194.0
(24.1)
636.9
636.9
(15.2)
862.4
862.4
35.4
155.11
55.00
2.12
169.22
60.00
2.31
30 June 2006
305
SECTOR: TEA
Jay Shree Tea
BOOK PROFIT - Rs105
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
•
Jay Shree Tea
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
2,144.8
2,428.5
2,486.1
106.5
183.4
156.5
10.0
17.2
14.7
10.5
6.1
7.1
8.2
12.5
10.2
5.9
8.9
10.2
Net Sales
Change (%)
400.5
17.2
550.5
(5.5)
435.0
8.6
2,144.8
1.4
2,428.5
13.2
EBITDA
Change (%)
As % of sales
21.9
1,188.2
5.5
(122.9)
28.4
(22.3)
25.0
14.2
5.7
(2.5)
(106.9)
(0.1)
215.6
8,724.8
8.9
Interest
Depreciation
Other Income
9.3
13.9
19.9
-
12.5
13.1
117.7
-
10.0
13.5
10.0
-
47.4
57.2
213.9
-
50.0
57.2
85.0
-
PBT
Tax
18.6
1.5
(30.8)
(5.2)
11.5
-
106.8
0.3
193.4
10.0
Reported PAT
Adjusted PAT
Change(%)
17.1
17.1
434.4
(25.6)
(25.6)
(13.3)
11.5
11.5
(32.7)
106.5
106.5
69.3
183.4
183.4
72.2
26.67
25.00
2.39
26.67
25.00
2.39
Tea consumption is rising 2.5% in India and 1.6% globally.
Global production of ~1,800m kg is unlikely to rise in the
same proportion. We expect JTIL's tea division to do better
in FY07 due to higher price realization and better volumes.
FY07 tea production is expected to be around 21.5m kg and
average net sales realization higher at Rs84/kg (Rs78.2/kg
in FY06).
Major Development : Jayshree is likely to acquire additional
tea gardens in Darjeeling (0.7m kg) and Dooars (3m kg)
through its 90% subsidiary, The North Tukvar Tea (to be
renamed Birla Tea Company Ltd).
PAT Rs11.5m, down 33% YoY.
•
In FY07, we expect net sales of Rs2.42b, up 13% YoY, and PAT
Rs183m, up 72% YoY.
•
FY08E EPS of Rs14.7. We recommend profit booking on the
stock.
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
306
28
30 June 2006
307
SECTOR: PIPES
Jindal Saw
BUY - Rs263
30 June 2006
YEAR
END
09/05A
09/06E
09/07E
•
•
•
•
•
•
•
•
Jindal Saw
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E SEPTEMBER
23,136.2
34,500.0
44,850.0
1,007.3
1,556.3
2,172.6
21.4
32.2
44.9
12.3
8.2
5.9
12.2
18.1
19.8
12.9
12.7
14.5
Net Sales
Change (%)
5,862.5
175.8
EBITDA
Change (%)
As % of sales
757.1
184.5
12.9
1,079.7
50.9
11.3
940.1
33.8
12.3
2,671.6
102.4
11.5
3,964.3
48.4
11.5
Interest
Depreciation
Other Income
278.6
101.0
25.2
-
259.3
120.2
18.5
-
383.3
239.5
17.2
-
947.0
354.2
144.4
-
1,200.0
600.0
70.0
84.4
PBT
Tax
402.6
102.5
718.8
247.5
334.5
55.5
1,514.9
507.5
2,318.7
678.0
Reported PAT
Adjusted PAT
Change(%)
300.1
300.1
273.4
471.3
471.3
74.2
279.0
279.0
(7.0)
1,007.3
1,007.3
79.1
1,640.7
1,556.3
54.5
212.56
40.00
1.52
218.25
40.00
1.52
Jindal Saw, a total pipe solution company in India, now has
all it's SBUs - LSaw, Seamless and DI/CI - fully operational.
Major developments : The company recently augmented its
spiral pipe capacity at its Mundra plant to 150,000tpa. Over
the next 12-18 months, Jindal Saw is likely to invest ~Rs7b to
further augment capacities at Mundra & Kosi Kalan.
Recently, a Swedish court passed an order against Saw Pipes,
USA, in a case filed by BKG, a German Steel trading firm.
However, Jindal Saw is unlikely to be affected by this as Saw
Pipes USA, which is a subsidiary of Jindal Saw, has already
provided for such contingent liability.
The company has recently concluded its FCCB issue of $80m
convertible at a price of Rs675 per share.
It has a current order book of Rs14.4b which is expected to
be executed by March/April 2007.
In 3QFY06, we expect net sales of Rs 7.67b, up 30.8% YoY,
and PAT of Rs 279m, down 7% YoY.
For FY06, we expect net sales of Rs 34.5b, up 49% YoY, and
PAT of Rs 1.55b up 54.5% YoY.
At CMP the stock trades at 8.2x FY06E EPS of Rs32.2 and 5.9x
FY07E EPS of Rs44.9. We maintain a BUY on the stock with a
price target of Rs525 (11.6x FY07E).
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
308
29
FY05
3Q
FY06
2Q
FY06
FY05 FY06E
9,531.9 7,670.1 23,136.2 34,500.0
38.0
30.8
113.8
49.1
30 June 2006
309
SECTOR: CERAMIC TILES
Kajaria Ceramics
BUY - Rs43
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
Kajaria Ceramics
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
3267.6
4200.0
5000.0
281.8
361.0
434.3
3.8
4.9
5.9
11.3
8.9
7.4
19.0
19.9
19.6
14.1
13.4
14.0
Net Sales
Change (%)
615.8
8.4
1,097.7
28.8
803.4
30.5
3,267.6
16.7
4,200.0
28.5
EBITDA
Change (%)
As % of sales
140.9
10.7
22.9
196.6
7.1
17.9
160.9
14.2
20.0
677.3
10.6
20.7
810.0
37.9
19.3
Interest
Depreciation
Other Income
30.8
43.9
1.3
-
40.0
41.1
3.5
-
42.5
52.5
1.0
-
142.7
181.1
8.0
-
145.0
205.0
1.0
-
PBT
Tax
67.5
17.0
119.0
29.9
66.9
16.0
361.5
79.7
461.0
100.0
Reported PAT
Adjusted PAT
Change(%)
50.5
50.5
25.6
89.1
89.1
19.9
50.9
50.9
0.8
281.8
281.8
4.4
361.0
361.0
33.4
29.05
35.00
1.61
29.05
35.00
1.61
•
Demand for glazed ceramic tiles is growing at more than 17%
p.a. due to strong growth in construction. Kajaria Ceramics
is well-placed to take advantage of this.
•
Major developments: After increasing its capacity from 13.8m
sq. meters to 18m sq meters, Kajaria plans to further expand
its installed capacity to 26.4m sq meters by September 2006
and to 40m sq meters by March 2009. This capacity expansion
will happen either through organic or inorganic route. This
will provide it with continuous volume growth. To fund its
various expansion/acquisition plans, KCL has passed an
enabling resolution to issue GDRs/FCCBs up to $50m.
•
In 1QFY07, we expect net sales of Rs803m, up 30.5% YoY, and
•
In FY07, we expect net sales of Rs4.2b, up 28.5% YoY, and PAT
of Rs 361m up 33.4% YoY.
•
At CMP, the stock trades at 8.9x FY07E EPS of Rs4.9 and 7.4x
FY08E EPS of Rs5.9. We recommend a BUY on the stock with
a price target of Rs55 (11x FY07E EPS).
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
310
30
FY07E
FY06 FY07E
30 June 2006
311
SECTOR: PUMPS
KSB Pumps
BUY - Rs405
30 June 2006
YEAR
END
12/05A
12/06E
12/07E
•
•
KSB Pumps
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E DECEMBER
CY05
2Q
CY06
1Q
3,585
4,100
4,850
385
485
619
22.1
27.9
35.5
18.3
14.5
11.4
23.7
24.1
24.6
34.6
33.9
35.3
Net Sales
Change (%)
976.0
37.7
966.0 1,100.0
10.3
12.7
EBITDA
Change (%)
As % of sales
190.0
92.0
19.5
210.0
53.3
21.7
23.0
11.0
-
KSB Pumps, a 40% subsidiary of KSB AG, Germany, is a leading
player in the pumps and industrial valves business. We expect
it to be a major beneficiary of increasing capex in power
generation (nuclear and thermal), and in the refinery/
petrochemical sectors.
CY06E
CY05 CY06E
3,584.8
18.6
4,100.0
14.4
220.0
15.8
20.0
622.2
36.4
17.4
779.0
25.2
19.0
1.0
21.0
11.0
-
1.5
22.5
10.0
-
5.4
99.6
78.0
(2.8)
8.6
105.0
60.0
-
Major developments: None
Interest
Depreciation
Other Income
In 2QCY06, we expect revenues of Rs1.1b, up 13% YoY, and
PBT
Tax
178.0
59.0
199.0
68.0
206.0
68.0
598.0
220.0
725.4
240.0
Reported PAT
Adjusted PAT
Change(%)
119.0
119.0
101.7
131.0
131.0
68.0
138.0
138.0
16.0
378.0
375.2
28.8
485.4
485.4
26.8
88.64
45.00
1.11
98.48
50.00
1.23
•
For CY06, we expect net sales of Rs4.1b, up 14% YoY, and a
•
At CMP of Rs405, the stock trades at 14.5x CY06E EPS of
Rs27.9, and 11.4x CY07E EPS of Rs35.5. We maintain BUY
with a target of Rs750 (21x CY07E EPS).
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
312
31
30 June 2006
313
SECTOR: TEXTILE MACHINERY
BOOK PROFIT - Rs20,380
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
13,020.6
17,000.0
19,550.0
1,481.3
1,991.9
2,321.5
1197.5
1610.3
1876.7
17.0
12.7
10.9
32.4
31.7
27.9
41.9
46.5
40.9
The Multi Fibre Agreement (MFA) that came into effect in
January 2005 has pushed up demand for state-of-the-art
spinning machines. LMW has an outstanding order book of
Rs30b, 2.3x FY06 sales.
With an objective to grow faster LMW has acquired Jeetstex
Engineering Ltd (JEL), a Coimbatore based textile machinery
manufacturing company for Rs350m. This has increased its
production capacity by 20%.
•
In 1QFY07, we expect net sales of Rs3.25b, up 29% YoY, and
•
For FY07, we expect net sales of Rs17b,up 30.6% YoY and PAT
of Rs1.99b,up 34.5%.
•
At CMP, the stock trades at 12.7x FY07E EPS of Rs1,610 and
10.9x FY08E EPS of Rs1,876. We maintain profit booking.
FY06
4Q
FY07E
FY06 FY07E
Net Sales
Change (%)
251.92
33.92
394.74
24.53
325.00 1,302.06 1,700.00
29.01
31.42
30.56
EBITDA
Change (%)
As % of sales
36.75
41.83
14.59
74.29
104.98
18.82
61.80
68.17
19.02
204.71
67.24
15.72
323.00
57.79
19.00
Interest
Depreciation
Other Income
0.71
9.15
4.51
0.65
24.17
9.09
0.86
13.96
6.25
3.45
55.87
42.53
3.45
55.87
25.00
PBT
Tax
31.40
10.10
58.57
(25.00)
53.23
15.97
187.92
39.79
288.68
89.49
Reported PAT
Adjusted PAT
Change(%)
21.30
21.30
54.10
83.56
83.56
176.53
37.26
37.26
74.96
148.12
148.12
101.99
199.19
199.19
34.47
27.80
200.00
0.10
27.80
200.00
0.10
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
314
32
(Rs Million)
FY06
1Q
30 June 2006
315
SECTOR: PIPES
BUY - Rs314
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
9,723.4
13,250.0
16,000.0
1,368.8
1,860.1
2,400.0
23.7
26.2
33.8
13.2
12.0
9.3
17.8
19.6
20.5
22.5
23.6
22.9
* Rs 5 paid up
•
•
•
•
•
•
•
The demand for seamless pipes in the domestic market is
expected to grow at 20% p.a. on the back of demand growth
from the oil & gas sector, automobiles, boilers etc. This is in
addition to the demand from export markets. Maharashtra
Seamless (MSL) has an outstanding order book of Rs5b.
Major developments: MSL's proposed billet project to be set
up in Kalinganagar, Orissa has been put on hold for the time
being. It is looking at alternate site for this project. As an
alternative, the company may instead acquire a sick billet unit.
The new 14' TPA seamless plant has commenced production
and is operating at 80% capacity.
MSL has entered into a 50:50 joint venture with US-based Hydril
Company LP to make threaded connections on OCTG pipes
with a installed capacity for making 200,000 connections.
In 1QFY07, we expect net sales of Rs3.15b, up 55 % YoY and
For FY07, we expect net sales of Rs13.25b, up 36% YoY and PAT
of Rs1.86b up 40% YoY.
FY08E EPS of Rs33.8 (calculated on fully diluted equity of
Rs354.8m assuming full FCCB conversion). We maintain BUY
with a 2-year price target of Rs500 (15x FY08E).
MOTILAL OSWAL
30 June 2006
FY06
4Q
Net Sales
Change (%)
2,025.0
44.2
2,920.7
29.9
3,150.0
55.6
EBITDA
Change (%)
As % of sales
407.5
46.8
20.1
625.1
54.3
21.4
675.0
65.6
21.4
2,093.6
63.7
21.5
2,906.2
37.9
21.9
9.3
35.2
9.7
-
14.3
43.9
60.1
-
10.0
45.0
5.0
-
54.5
174.3
181.0
-
40.0
190.0
100.0
-
PBT
Tax
372.7
125.2
627.0
206.7
625.0
206.2
2,045.8
677.0
2,776.2
916.1
Reported PAT
Adjusted PAT
Change(%)
247.5
247.5
43.7
420.3
420.3
34.5
418.8
418.8
69.2
1,368.8
1,368.8
60.9
1,860.1
1,860.1
35.9
115.28
40.00
1.28
141.92
40.00
1.28
Interest
Depreciation
Other Income
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
316
33
(Rs Million)
FY06
1Q
FY07E
FY06 FY07E
9,723.4 13,250.0
25.7
36.3
30 June 2006
317
SECTOR: ALLOY STEEL
BUY - Rs135
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
NET SALES
(RS M)
PAT*
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
6150
7398
9576
582
687
902
19.1
21.3
27.9
7.1
6.3
4.8
62.4
46.6
43.8
54.2
50.4
50.3
Y/E MARCH
*PAT adjusted for preference dividend
•
Major developments: Company has recommended a payment
of dividend of Rs4.50 per share. FY07 numbers would take
into effect the merger of Pranay Sheetmetal Stampings Ltd,
Console Estate and Investments Ltd and Valueline Hotels &
Resorts Ltd. Hence quarterly numbers are not strictly
comparable.
•
Outlook for MUSCO continues to be good, with its major user
industry - autos - showing double-digit growth in 1QFY07.
•
For this quarter, we expect revenues of Rs1.56b, up 9.4%
YoY, and Adjusted PAT of Rs128m, up 66% YoY.
•
Adjusted PAT of Rs687m, up 18% YoY.
•
At CMP of Rs135, the stock trades at 6.3x FY07E EPS of Rs21.3
and 4.8x FY08E EPS of Rs27.9. We maintain BUY with a target
of Rs195 (7x FY08E EPS).
MOTILAL OSWAL
30 June 2006
1,426.4
21.1
EBITDA
Change (%)
As % of sales
169.3
31.4
11.9
560.3
90.5
30.1
25.5
24.3
4.8
-
PBT
Tax
Reported PAT
Adjusted PAT *
Change(%)
Dividend
Dividend (%)
Dividend Yield (%)
E : MOSL Estimates
* For Preference Dividend
MOTILAL OSWAL
34
FY06
4Q
Net Sales
Change (%)
Interest
Depreciation
Other Income
318
(Rs Million)
FY06
1Q
FY07
FY06 FY07E
1,858.8 1,560.0
21.8
9.4
6,150.4
17.9
7,398.0
20.3
268.0
58.3
17.2
1,138.9
33.5
18.5
1,294.7
13.7
17.5
30.6
60.4
42.4
-
40.0
40.0
5.0
-
111.5
130.9
27.3
29.5
121.1
148.9
14.8
-
124.3
39.8
511.7
160.2
193.0
65.0
894.2
302.7
1,039.5
348.2
84.5
84.5
25.6
351.5
351.5
32.9
128.0
128.0
66.3
591.5
581.9
25.3
691.3
687.4
18.1
163.70
45.00
3%
200.08
55.00
4%
30 June 2006
319
SECTOR: PIPES
Man Industries
BUY - Rs195
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
Man Industries
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
8,699.3
13,000.0
16,000.0
350.5
664.9
848.0
13.6
25.1
32.0
14.3
7.8
6.1
12.8
20.0
20.8
13.9
21.6
24.5
The need for low-cost transport of critical inputs like oil &
gas is the key growth driver for Man Industries, a leading
manufacturer of LSAW & HSAW pipes. Currently, the company
has a total order book of Rs12.5b. It has also participated in
bids worth Rs20b. It expects a success rate of around 20%.
•
In 1QFY07, we expect net sales of Rs2b, up 66% YoY, and PAT
Rs87.9m, up 21% YoY.
•
For FY07, we expect net sales of Rs13b, up 49% YoY, and PAT
Rs645m, up 90% YoY.
•
FY08E EPS of Rs32. We maintain BUY with a price target of
Rs250 (10x FY07E).
MOTILAL OSWAL
30 June 2006
FY06
4Q
Net Sales
Change (%)
1,208.0
140.2
3,603.0
65.7
2,000.0
65.6
EBITDA
Change (%)
As % of sales
157.5
92.5
13.0
354.8
130.4
9.8
220.0
39.7
11.0
937.1
120.3
10.8
1,364.9
45.7
10.5
25.9
27.0
-
127.1
60.3
-
50.0
60.0
-
268.3
155.6
-
220.0
180.0
-
104.6
32.2
167.4
47.3
110.0
22.1
513.2
162.7
964.9
300.0
72.4
72.4
80.5
120.1
120.1
268.4
87.9
87.9
21.4
350.5
350.5
91.3
664.9
664.9
89.7
64.35
25.00
1.28
79.50
30.00
1.54
Interest
Depreciation
Other Income
Major development: Man secured orders for LSAW pipes from
an Iranian company worth Rs 4b and from Reliance Industries
Ltd worth Rs1b.
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
320
35
(Rs Million)
FY06
1Q
FY07
FY06 FY07E
8,699.3 13,000.0
70.5
49.4
30 June 2006
321
SECTOR: INFORMATION TECHNOLOGY
Mastek
BUY - Rs350
30 June 2006
YEAR
END
06/05A
06/06E
06/07E
Mastek
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E JUNE
5670.1
6869.5
8147.9
534.5
694.8
823.5
19.3
24.7
29.3
18.2
14.2
12.0
24.7
26.7
24.1
32.0
35.3
30.6
Net Sales
Change (%)
1,528.2
32.3
EBITDA
Change (%)
As % of sales
236.6
25.2
15.5
322.1
52.0
18.2
4.9
48.8
30.7
12.1
PBT
Tax
•
Over the past few quarters, Mastek has reported improved
quality of earnings by focusing on the insurance domain and
systems integration service line.
•
Major Developments: Mr Ashank Desai, Chairman, has
decided to take a sabbatical from May 2006 to January 2007.
During this time, Mr Sudhakar Ram will take over as the acting
chairman of the company.
Interest
Depreciation
Other Income
Loss in Equity Affiliate
•
For 4QFY06, we expect Mastek to report revenues of Rs1.88b,
up 23% YoY, and PAT of 209m up 42%.
•
For FY06, we expect Mastek to report revenues of Rs6.87b
up 21%, and PAT of Rs695m, up 30%.
Reported PAT
Adjusted PAT
Change(%)
•
and 12x FY07E EPS of Rs29.3. We maintain a BUY with a price
target of Rs440 (15x FY07E).
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
322
36
FY05
4Q
FY06
3Q
FY06E
FY05 FY06E
1,773.7 1,876.1
20.3
22.8
5,670.1
41.7
6,869.5
21.2
328.1
38.7
17.5
883.7
90.3
15.6
1,199.3
35.7
17.5
1.4
70.9
21.0
(6.7)
1.0
75.0
30.0
(10.0)
10.5
244.1
96.4
(52.0)
6.7
288.2
113.6
(36.7)
225.7
42.2
264.1
71.2
272.1
42.3
673.5
82.3
981.3
170.7
183.5
147.3
48.4
192.9
173.0
25.8
229.8
209.8
42.4
591.3
534.5
84.0
810.6
694.8
30.0
104.02
75.00
2.14
105.53
75.00
2.14
30 June 2006
323
SECTOR: TEA
Mcleod Russel India
BOOK PROFIT - Rs106
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
5,115.2
5,704.0
6,460.0
252.8
526.2
628.2
2.6
5.3
6.4
41.2
19.8
16.6
5.3
9.7
12.7
n.a.
n.a.
n.a.
•
Mcleod Russel India, after merger with Williamson Tea Assam,
has become one of the largest bulk tea producers in the world
with total bulk black tea capacity of c.60m kgs.
•
Major Development: The proposed amalgamation of
Williamson Tea Assam Ltd has been given effect, with effect
from April 1, 2005. As per the scheme of amalgamation, the
shares to be allotted to the shareholders of WTAL have been
transferred to share suspense account. Mcleod Russel has
reported consolidated results for the year ending FY06.
•
•
Mcleod Russel India
Y/E MARCH
On a consolidated basis, Mcleod would post net sales of
Rs760m and a Loss of Rs20m in 1QFY07. We have downgraded
our FY07 estimated sales to Rs5.74b (earlier Rs5.89m), up
11.% YoY and PAT to Rs526m (earlier Rs629m), up 108.1% YoY.
This is based on our revised average selling price of Rs95/kg
from an earlier estimate of Rs92/kg without changing the
volume of 62m kg.
MOTILAL OSWAL
30 June 2006
1,157.3
760.0
5,115.2
5,704.0
11.5
EBITDA
Change (%)
As % of sales
(691.3)
70.0
274.2
1,204.0
6.8
9.2
0.1
21.1
Interest
Depreciation
Other Income
(9.5)
(276.2)
50.1
-
120.0
50.0
80.0
-
359.1
(106.7)
335.4
23.6
425.0
230.0
70.0
-
PBT
Tax
(355.5)
95.9
(20.0)
-
357.2
104.4
619.0
92.9
Reported PAT
Adjusted PAT
Change(%)
(451.4)
(451.4)
(20.0)
(20.0)
252.8
252.8
526.2
526.2
108.1
E: MOSL Estimates
Comparative quaterly number not available
MOTILAL OSWAL
324
37
FY07E
FY06 FY07E
Net Sales
Change (%)
Dividend
Dividend (%)
Dividend Yield (%)
At CMP, the stock trades at 19.8x FY07E EPS of Rs6.2 and at
16.6x FY08E EPS of Rs6.4 (post merger). We maintain profit
booking on the stock.
(Rs Million)
FY06
4Q
30 June 2006
325
SECTOR: SHIPPING
Mercator Lines
SELL - Rs34
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
Mercator Lines
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
7,899.2
9,800.0
10,780.0
1,910.7
1,820.5
2,567.5
10.1
8.5
11.4
3.4
4.0
3.0
38.4
28.9
30.5
19.6
16.8
19.0
Net Sales
Change (%)
1,405.7
44.8
EBITDA
Change (%)
As % of sales
692.6
154.4
49.3
957.2
23.8
41.2
Interest
Depreciation
Other Income
90.7
184.6
20.7
-
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
*PAT adjusted for Preference dividend
•
•
•
•
•
•
(Rs Million)
NET SALES
(RS M)
Mercator Lines has emerged as one of the largest transporter
of oil and petroleum products through its fleet consists of
Very Large Crude Carrier (VLCC), Suezmax, Panamax, MRs.
Its owned tonnage capacity stand at 1,338,621 DWT and longterm leased charter at 650,000 DWT
Major development: Mercator Lines is planning to invest
Rs8.1b in offshore drilling and exploration to be operational
by 2008-09.
We have downgraded the FY07 & FY08 estimates on account
of loss of revenue due to dry docking of the ships and
possibility of lower or nil addition of vessels because of high
asset prices.
In Q1FY07 we expect net sales of Rs1.82b and PAT of Rs481m.
PAT of Rs1.82b down 4.6% YoY. The decline would be due to
full impact of dry docking expenses.
At CMP (Re1 paid up), the stock trades 4x FY07E EPS of Rs8.5
and 3x FY08E EPS of Rs11.4. Since there is a marginal decline
in the earnings of FY07 we recommend a SELL on the stock.
MOTILAL OSWAL
30 June 2006
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
7,899.2
40.9
9,800.0
24.1
850.2
22.8
46.5
3,403.2
54.8
43.1
3,611.3
36.9
208.9
259.7
145.9
-
90.7
259.7
-
656.2
936.7
159.5
-
656.2
1,000.0
-
438.0
18.8
634.5
13.6
499.8
18.8
1,969.9
27.1
1,955.1
102.6
419.3
419.3
106.0
620.8
620.8
(3.6)
481.1
481.1
-
1,942.7
1,910.7
11.4
1,852.5
1,820.5
(4.6)
187.07
180.00
5.32
544.65
225.00
6.65
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
2,323.2 1,828.2
34.7
-
* PAT Adjusted for Preference Dividend
Note:Q1FY06 are stand alone figures and hence strictly not comparable.
MOTILAL OSWAL
326
38
30 June 2006
327
SECTOR: TYRE
MRF
BUY - Rs2,396
30 June 2006
YEAR
END
09/04A
09/05A
09/06E
NET SALES
(RS M)
PAT
(RS M)
CASH EPS
(RS)
CASH P/E
(X)
ROE
(%)
ROCE
(%)
25800.2
29649.9
35367.8
565
323
379
359.37
336.32
405.62
6.67
7.12
5.91
7.81
4.49
5.08
10.04
7.32
9.16
•
•
the price hikes would be visible in the July-September quarter
(4QFY06 for MRF).
•
In 3QFY06, we expect revenues of Rs9b up 13% YoY, and a
loss of Rs5.3m against Rs39.3m profit last year.
•
To reflect the cost hikes, we have downgraded MRF's FY06E
PAT to Rs379.3m against our earlier estimate of Rs468m.
•
At CMP of Rs2,396, the stock is trading at 6x FY06E cash EPS
of Rs405.6. We recommend BUY on expectations of a sharp
turnaround 4QFY06 onwards.
MOTILAL OSWAL
MRF
30 June 2006
Y/E SEPTEMBER
CY06
CY05 CY06E
7,951.2
21.3
EBITDA
Change (%)
As % of sales
440.3
(20.5)
5.5
550.3
62.0
6.3
454.7
3.3
5.1
1,726.8
(11.2)
5.8
2,347.6
36.0
6.6
Interest
Depreciation
Other Income
82.2
291.9
10.0
139.5
126.6
342.6
11.6
-
130.0
340.0
10.0
-
326.6
1,103.2
174.6
275.0
488.4
1,340.5
37.6
-
PBT
Tax
(63.3)
36.9
92.7
34.3
(5.3)
-
196.6
148.8
556.3
177.0
(100.2)
39.3
(77.0)
58.4
58.4
158.4
(5.3)
(5.3)
(113.5)
47.8
322.8
(42.9)
379.3
379.3
17.5
95.65
200.00
0.83
95.65
200.00
0.83
Dividend
Dividend (%)
Dividend Yield (%)
E : MOSL Estimates
MOTILAL OSWAL
39
CY06
2Q
Net Sales
Change (%)
Reported PAT
Adjusted PAT
Change(%)
328
(Rs Million)
CY05
3Q
8,796.0 9,000.0 29,649.9 35,367.8
25.3
13.2
14.9
19.3
30 June 2006
329
SECTOR: AGROCHEMICALS
Nagarjuna Agrichem
BUY - Rs109
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
Nagarjuna Agrichem
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
3,515.2
3,866.7
4,500.0
280.0
293.1
360.2
18.8
19.7
24.2
5.8
5.5
4.5
28.2
23.4
22.8
36.7
31.8
31.6
Net Sales
Change (%)
901.6
51.3
849.0
39.6
883.5
(2.0)
3,515.2
22.0
3,866.7
10.0
EBITDA
Change (%)
As % of sales
130.7
57.5
14.5
127.2
91.9
15.0
127.3
(2.6)
14.4
533.5
16.8
15.2
590.1
10.6
15.3
Interest
Depreciation
Other Income
26.9
17.5
6.3
-
29.5
21.2
19.3
-
27.5
21.7
6.3
-
118.3
77.0
80.1
-
112.5
80.0
40.0
-
PBT
Tax
92.6
31.3
95.8
37.7
84.4
24.0
418.3
138.3
437.6
144.4
Reported PAT
Adjusted PAT
Change(%)
61.3
61.3
41.6
58.1
58.1
131.5
60.4
60.4
(1.5)
280.0
280.0
14.2
293.2
293.2
4.7
33.61
20.00
1.84
33.61
20.00
1.84
Strong export demand for agrochemicals would continue to
drive sales of Nagarjuna Agrichem. While the domestic
demand is also expected to remain upbeat on account of
better monsoon, higher input cost and competitive
environment for generics are together likely to exert pressure
on domestic sales margins.
Major development: The company is considering closure of
its Australian subsidiary as it is no longer necessary for an
overseas manufacturer to have a local office in Australia for
holding product registration.
•
In 1QFY07, we expect net sales of Rs883.5m, down 2% YoY
and PAT of Rs60.4m, down 1.5% YoY.
•
For FY07, we expect net sales of Rs3.87b, up 10% YoY and PAT
of Rs293m, up 4.7%YoY.
•
4.5x FY08E EPS of Rs24.2. We maintain a BUY on the stock
with a price target of Rs180.
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
330
40
30 June 2006
331
SECTOR: PUBLICATION
HOLD - Rs285
30 June 2006
YEAR
END
3/06A
3/07E
3/08E
•
•
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
2,942
3,400
3,910
371
418
476
19.5
21.9
25.0
14.6
13.0
11.4
19.3
19.5
19.6
18.3
21.1
24.1
Net Sales
Change (%)
1,600.4
8.8
EBITDA
Change (%)
As % of sales
442.8
20.1
27.7
37.2
1.4
8.4
8.2
21.0
7.6
-
PBT
Tax
Syllabus changes in Maharashtra and Gujarat continue to drive
Navneet's growth in publication business. Its strategy to shifts
its focus in the stationery business from exports to branded
stationery should start reflecting FY07 onwards.
Interest
Depreciation
Other Income
Major developments: We expect some publication sales to
accrue in 2QFY07 on account of late purchases by its end
users. This should result in 15% growth in the publication
business in 1QFY07.
•
In 1QFY07, publication revenue is expected to grow 15%, while
stationery sales are expected to degrow 20% (mainly on
account of export defocus). We expect revenues of Rs1.65b,
up 3.1% YoY, and PAT of Rs318m, up 1.9% YoY.
Reported PAT
Adjusted PAT
Change(%)
•
For FY07, we expect net sales of Rs3.4b up 15.6% YoY and PAT
of Rs418m up 12.7% YoY.
Dividend
Dividend (%)
Dividend Yield (%)
•
FY08E EPS of Rs25. We maintain our price target of Rs335
(15x FY07E). We recommend HOLD at current levels. Fresh
buying may be considered at Rs265 levels.
MOTILAL OSWAL
30 June 2006
E: MOSL Estimates
MOTILAL OSWAL
332
41
FY06
1Q
FY06
4Q
FY07
FY06A FY07E
444.7 1,650.0
13.2
3.1
2,942.1
7.2
3,400.0
15.6
480.0
8.4
29.1
593.7
13.5
20.2
719.0
21.1
21.1
6.3
23.5
13.7
-
10.0
22.0
5.0
-
22.7
90.7
22.9
-
30.0
110.0
45.0
-
421.2
109.2
21.1
5.9
453.0
135.0
503.2
132.3
624.0
205.9
312.0
312.0
29.1
15.2
15.2
25.3
318.0
318.0
1.9
370.9
370.9
16.4
418.1
418.1
12.7
181.4
85.0
3.0
192.1
90.0
3.2
30 June 2006
333
SECTOR: IT EDUCATION
NIIT
PARTLY BOOK PROFIT - Rs365
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
4,507.00
5,196.70
5,743.70
392.40
538.29
671.17
18.24
25.03
31.21
20.01
14.58
11.70
12.70
15.46
16.75
7.47
11.03
12.14
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
NIIT
The growth in the Indian IT & ITES segment will lead to an
increasing demand for trained IT personnel. Nasscom study
predicts an additional demand of 600,000 IT professionals by
FY08. NIIT with its leadership position, wide reach across
the globe and a formidable brand is set to make the most of
the sustainable growth in IT sector.
FY06
4Q
Net Sales
Change (%)
1,064.0
1.8
1,150.0
10.0
1,233.5
15.9
4,507.0
13.2
5,196.7
15.3
EBITDA
Change (%)
As % of sales
144.0
12.5
13.5%
165.0
27.2
14.3%
174.3
21.0
14.1%
603.0
19.8
13.4%
802.1
33.0
15.4%
86.0
46.0
102.0
(20.0)
-
98.0
10.0
-
374.0
36.0
-
33.3
402.0
40.0
-
PBT
Tax
104.0
7.0
43.0
7.0
86.3
10.0
265.0
29.0
406.9
45.0
Reported PAT
PAT(Incl. Associates)
Change(%)
97.0
132.0
22.2
36.0
82.0
0.4
76.3
122.3
(7.4)
236.0
392.4
12.1
361.9
538.3
37.2
146.08
60.00
1.64
146.08
60.00
1.64
Interest
Depreciation
Other Income
•
Major Developments: NIIT Board has passed an enabling
resolution to raise up to $50m (with a 25% green shoe option)
through the equity route.
•
It has signed an agreement with Sun Technologies for using
the latter's tools and technical resources in its curriculum
and courses.
•
For 1QFY07, it is expected to report revenues of Rs.1.23b,
up 16% YoY and PAT of Rs122.3m, down 7% YoY.
Dividend
Dividend (%)
Dividend Yield (%)
•
For FY07, we expect revenues of Rs5.2b, up 15%, and PAT
Rs538m, up 37%.
E: MOSL Estimates
•
At CMP of Rs367 the stock trades at 15x FY07E EPS of Rs25.
We recommend PARTLY BOOK PROFIT. Fresh buying may be
considered at Rs315 levels with a target price of Rs375.
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
334
42
(Rs Million)
FY06
1Q
FY07E
FY06 FY07E
30 June 2006
335
SECTOR: PACKAGING
Paper Products
BUY - Rs305
30 June 2006
YEAR
END
12/05A
12/06E
12/07E
•
Paper Products
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E DECEMBER
CY05
2Q
4,328.7
4,666.3
5,192.7
285.1
308.8
375.8
22.7
24.6
30.0
13.4
12.4
10.2
14.5
14.3
15.5
13.6
13.7
18.9
Net Sales
Change (%)
1,125.3
9.2
EBITDA
Change (%)
As % of sales
142.1
(6.6)
12.6
134.4
18.2
11.6
Interest
Depreciation
Other Income
1.4
63.4
11.4
-
Major Developments: Paper Products's new plant being set
up at Uttaranchal, North India, will partially start production
by July-August. We believe at optimum capacity this new
plant will deliver ~Rs900m of sales. Most of this is likely to
happen only in CY07. This year's contribution is unlikely to
be more than Rs150m.
•
In 2QCY06E, we expect net sales of Rs1.2b, up 6.6% YoY and
PBT
Tax
•
In CY06, we expect net sales of Rs4.66b, up 7.8% YoY and PAT
•
At CMP, the stock trades at 12.4x CY06E EPS of Rs24.6 and
10.2x CY07E EPS of Rs30. We recommend a BUY on the stock
with a two year price target of Rs555.
Reported PAT
Adjusted PAT
Change(%)
Dividend
Dividend (%)
Dividend Yield (%)
E : MOSL Estimates
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
336
43
CY06
1Q
CY06
CY05 CY06E
1,160.7 1,200.0
14.8
6.6
4,328.7
9.9
4,666.3
7.8
138.8
(2.3)
11.6
546.9
8.0
12.6
579.4
5.9
12.4
1.4
58.1
35.6
-
1.4
61.8
35.6
-
5.5
249.4
94.9
8.4
6.2
247.2
110.6
-
88.7
25.9
110.5
32.0
111.2
32.2
386.9
101.8
436.6
127.8
62.8
62.8
(12.3)
78.5
78.5
24.6
79.0
79.0
25.8
285.1
276.7
18.3
308.8
308.8
8.3
113.16
80.00
2.62
113.16
80.00
2.62
30 June 2006
337
Pratibha Industries
BUY - Rs196
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
•
•
•
•
Pratibha Industries
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
1,567.0
3,250.0
5,500.0
122.7
220.4
385.8
40.5
15.4
27.0
22.8
12.7
7.2
14.9
21.1
27.0
16.8
17.7
24.0
Pratibha Industries (PIL) specialises in water-related projects
and is now enlarging its operations to verticals such as
tunneling, oil & gas pipelines, hydro power, real estate and
retail infrastructure. Currently its order book is at Rs 7.30b
which is 2.2x FY07E earnings.
Major Developments: PIL has been mandated for a water
supply project of Rs26m by NMMC which will be completed in
the next 12 months. The project involves providing, laying
and commissioning of drinking water from Kalamboli to Digha
in Navi Mumbai.
PIL has entered into a long term agreement with Ostu Stettin, an Austrian corporation which is third largest in the
world for executing tunneling projects. This will enable PIL
to jointly bid for tunneling projects in India.
For FY07 we expect net sales of Rs3.25b, up 107.4%, and PAT
of Rs220m, up 79.6% YoY.
7.2x FY08E EPS of Rs27. We maintain a BUY with a two year
price target price of Rs550 (20x FY08E).
MOTILAL OSWAL
30 June 2006
FY06
4Q
FY07
FY06 FY07E
Net Sales
Change (%)
-
627.4
-
550.0
-
1,567.0
73.0
3,250.0
107.4
EBITDA
Change (%)
As % of sales
-
61.3
9.8
68.8
12.5
192.5
49.0
12.3
422.5
119.5
13.0
Interest
Depreciation
Other Income
-
11.2
2.1
12.5
-
22.5
2.5
0.8
-
67.7
6.6
18.7
-
140.0
10.0
3.0
-
PBT
Tax
-
60.5
7.7
44.6
8.3
136.9
14.2
275.5
55.1
Reported PAT
Adjusted PAT
Change(%)
-
52.8
52.8
-
36.3
36.3
-
122.7
122.7
51.3
220.4
220.4
79.6
-
-
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
338
44
(Rs Million)
FY06
1Q
30 June 2006
339
SECTOR: PIPES
PSL
BOOK PROFIT - Rs239
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
•
•
•
•
•
PSL
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
15,390.6
18,700.0
22,814.0
519.5
655.0
928.4
16.2
17.4
21.6
14.7
13.7
11.1
12.3
14.5
17.5
12.3
14.5
17.7
Net Sales
Change (%)
4,338.7
116.7
EBITDA
Change (%)
As % of sales
324.2
125.9
7.5
253.6
(27.7)
5.4
343.6
6.0
9.0
1,344.4
46.9
8.7
1,940.0
37.9
10.4
Interest
Depreciation
Other Income
120.4
58.4
31.7
-
57.0
14.8
60.5
(27.6)
120.0
84.7
35.0
-
485.3
338.6
176.1
(27.6)
540.0
550.0
100.0
-
PBT
Tax
177.1
57.0
214.7
57.1
173.9
43.4
669.0
177.1
950.0
295.0
Reported PAT
Adjusted PAT
Change(%)
120.1
120.1
136.4
157.6
185.2
28.5
130.5
130.5
8.7
491.9
519.5
38.6
655.0
655.0
26.1
Dividend
Dividend (%)
Dividend Yield (%)
160.50
50.00
2.09
187.85
50.00
2.09
E: MOSL Estimates
PSL is one of the largest players in HSaw (helical/spiral) pipes
in the country, which are not only used to transport water
but also to transport oil and gas. Its current order book stands
at Rs15b.
Major development: PSL has emerged as the lowest bidder
in GAIL's Rs2.18b Dabhol-Panvel pipeline project. PSL will
provide GAIL with 30-inch diameter continuous pipeline
system from Dahej to Dabhol. PSL, thereby, has effectively
secured all of GAIL's large diameter gas pipeline tenders,
which aggregates to a supply of 551.5km of pipes.
The company has recently announced its decision to start its
manufacturing operations in the lower Gulf region of west
Asia.
PSL had recently expanded its Kandla plant, which will help
the company to include a 300,000 tpa high-pressure spiral
pipes facility. The plant is considered to be state-of-art, with
two-step helical pipe formation technology.
In 1QFY07, we expect net sales of Rs 3.8b, down 12.4% YoY
and PAT of Rs130.5m, up 8.7% YoY.
For FY07, we expect net sales of Rs 18.7b, up 21.5% YoY and
At CMP, the stock trades 13.7x FY07E EPS of Rs17.4 (assuming
full conversion of $40m FCCB at Rs.234.54) and 11.1x FY08E
EPS of Rs21.6. We maintain profit booking on the stock.
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
340
45
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
4,687.8 3,800.0 15,390.6 18,700.0
(17.8)
(12.4)
6.8
21.5
30 June 2006
341
SECTOR: AGROCHEMICALS
Rallis India
BUY - Rs283
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
Rallis India
PAT*
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
6149.6
7072.0
7800.0
240.1
329.0
374.0
20.0
27.5
31.2
14.1
10.3
9.1
42.8
28.9
26.1
14.4
19.7
22.3
Net Sales
Change (%)
1,222.1
11.1
EBITDA
Change (%)
As % of sales
104.7
38.9
8.6
0.8
(98.5)
0.1
22.5
41.4
1.1
7.1
* PAT adjusted for Pref. Dividend
•
(Rs Million)
NET SALES
(RS M)
Late monsoon could see postponement of sales of pesticides
and seeds from June to July, thereby affecting revenue in
1QFY07E. However exports continue to do well and we expect
@15% growth in FY07.
FY06
1Q
FY06
4Q
FY07
FY06A FY07E
1,185.9 1,200.0
4.3
(1.8)
6,149.6
9.0
7,072.0
15.0
94.8
(9.5)
7.9
553.4
(40.7)
9.0
720.0
30.1
10.2
20.6
41.5
13.5
(60.0)
23.0
42.0
1.0
-
84.1
167.5
44.1
(99.5)
85.0
140.0
50.0
-
•
Major Developments: None
Interest
Depreciation
Other Income
•
In 1QFY07, we expect net sales of Rs1.2b, flat YoY and APAT
of Rs27.8m, down 19% YoY.
PBT
Tax
34.8
7.5
12.2
(18.5)
30.8
3.0
445.4
20.1
545.0
130.0
•
APAT of Rs329m, up 37% YoY.
Reported PAT
Adjusted PAT
Change(%)
27.3
34.4
(1.7)
30.7
(29.3)
(173.1)
27.8
27.8
(19.2)
425.3
240.1
(5.2)
415.0
329.0
37.0
•
At CMP of Rs 283, the stock trades at 10x FY07E EPS of Rs27.5
and 9x FY08E earnings of Rs31.2. We maintain BUY with a
target of Rs 375 (12x FY08E EPS).
54.05
40.00
1.41
67.57
50.00
1.77
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
* PAT adjusted for Pref. Dividend
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
342
46
30 June 2006
343
SECTOR: TEXTILE
Sarla Polyester
HOLD - Rs108
30 June 2006
YEAR
END
03/05A
03/06A
03/07E
•
•
Sarla Polyester
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
1QE Full year Full year
706.4
867.5
1000.0
100.9
113.6
123.8
14.5
16.3
17.8
7.4
6.6
6.0
29.8
26.5
23.7
24.3
25.7
28.5
Net Sales
Change (%)
204.9
24.4
240.4
33.8
230.0
12.2
867.5
22.8
1,000.0
15.3
EBITDA
Change (%)
As % of sales
43.4
38.3
21.2
37.4
(9.8)
15.6
50.0
15.2
21.7
170.4
13.9
19.6
220.0
29.1
22.0
4.3
6.5
0.7
-
0.0
6.2
7.5
-
4.0
6.5
2.0
-
12.0
25.9
9.0
-
10.0
27.5
7.5
-
PBT
Tax
33.3
3.0
38.7
18.5
41.5
13.0
141.6
28.0
190.0
66.2
Reported PAT
Adjusted PAT
Change(%)
30.3
30.3
42.3
20.3
20.3
(23.0)
28.5
28.5
(5.9)
113.6
113.6
12.5
123.8
123.8
9.0
20.85
30.00
2.79
27.80
40.00
3.72
Major developments: Shift in product mix from commodity
yarn to high value-added yarn is on track. However, production
of high tenacity yarn which started in February 2006 has run
into some technical problems. We expect the same to be
stabilised in 2QFY07.
Interest
Depreciation
Other Income
Late start-up of new products and full tax liability FY07
onwards will lead to lower PAT and EPS growth.
•
PAT of Rs28.5m, down 6% YoY.
•
For FY07, we expect net sales of Rs1b, up 15% YoY, and PAT of
Rs124m, up 9% YoY.
•
At the CMP of Rs 108, the stock trades at 6x FY07E EPS of
Rs17.8. We expect the stock to be an underperformer in the
short term. We recommend a HOLD on the stock for existing
investors.
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
344
47
30 June 2006
345
SECTOR: SUGAR
Simbhaoli Sugar
BUY - Rs87
30 June 2006
YEAR
END
03/06E
03/07E
03/08E
Simbhaoli Sugar
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
4321.7
5500.0
6600.0
217.0
454.0
514.0
10.0
20.9
23.6
8.7
4.1
3.7
19.8
24.8
23.2
12.2
11.6
13.9
Net Sales
Change (%)
1,370.0
50.9
EBITDA
Change (%)
As % of sales
217.8
93.4
15.9
164.7
(60.6)
14.8
70.2
30.6
6.5
-
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
•
Simbhaoli's capacity is expected to increase from 11,300tcd
in SY2005-06 to 20,100tcd in SY2006-07. This will help it to
crush about 2.5m tons of cane (1.54m ton in SY2005-06).
•
Major developments: The government has allowed duty free
cost of imported sugar is over Rs23/kg, compared to the
domestic price of Rs18-19/kg.
•
Sugar prices after rising in April and May are lower by Re1/
kg. However, the outlook remains positive considering firm
global prices.
•
In 1QFY07, we expect net revenue of Rs1.25b, down 9% YoY,
and PAT Rs90m, up 28% YoY.
•
For FY07, we expect net revenue of Rs5.5b, up 27%, and PAT
Rs454m, up 109%.
•
At CMP, the stock trades at 4x FY07E EPS of Rs20.9, 3.7x
FY08E EPS of Rs23.6 and EV/EBITDA of 7.6x FY07E and 6x
FY08E. We maintain BUY on the stock with a price target of
Rs145.
MOTILAL OSWAL
30 June 2006
Interest
Depreciation
Other Income
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
346
48
FY06
1Q
FY06
4Q
FY07
FY06E FY07E
1,116.4 1,250.0
(24.9)
(8.8)
4,321.7
10.0
5,500.0
27.3
190.0
(12.8)
15.2
620.1
(17.9)
14.3
970.0
56.4
17.6
59.3
33.6
24.2
-
45.0
35.0
10.0
-
215.8
125.7
66.1
(110.0)
210.0
200.0
40.0
-
123.5
53.0
96.0
35.8
120.0
30.0
454.7
158.7
600.0
140.0
70.5
70.5
293.9
60.2
60.2
(77.5)
90.0
90.0
27.7
296.0
180.0
(35.1)
460.0
454.0
13.2
73.03
30.00
3.46
98.07
40.00
4.62
30 June 2006
347
BUY - Rs1,377
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
13,445.8
21,750.0
31,537.5
416.1
1,061.1
1,899.0
48.1
121.4
217.3
28.6
11.3
6.3
17.5
31.2
36.1
14.1
24.3
30.8
Net Sales
Change (%)
3,112.6
79.4
EBITDA
Change (%)
As % of sales
258.6
139.8
8.3
333.9
24.8
8.4
402.9
55.8
9.0
1,180.8
68.2
8.8
2,078.0
76.0
9.6
81.3
24.6
2.3
-
118.1
53.3
29.3
-
118.1
60.0
2.3
-
403.6
229.3
32.8
-
380.0
258.4
10.0
-
PBT
Tax
155.0
38.8
191.8
85.5
227.1
63.6
580.7
164.6
1,449.6
388.5
Reported PAT
Adjusted PAT
Change(%)
116.2
116.2
748.2
106.3
106.3
(18.2)
163.5
163.5
40.7
416.1
416.1
65.3
1,061.1
1,061.1
155.0
495.90
50.00
0.36
Simplex Infrastructure with its well-diversified portfolio and
a strong order book of Rs45b (3.3x times its FY06 net sales),
is well placed to take advantage of the huge opportunity in
infrastructure development.
Interest
Depreciation
Other Income
Major developments: Simplex has bagged two construction
projects awarded by the Jharkhand Government for its Ranchi
mega sports complex. Simplex would execute the projects,
worth Rs2.5b, through a joint venture with UK-based
construction companies.
FY06
1Q
FY06
4Q
FY07E
FY06 FY07E
3,962.7 4,500.0 13,445.8 21,750.0
28.7
44.6
34.6
61.8
•
The company has approved a 5:1 stock split (Rs10 to Rs2
paid-up) and also approved raising of $200 million from
domestic/international market.
•
In 1QFY07, we expect net sales of Rs4.5b, up 44.6% YoY, and
Dividend
Dividend (%)
Dividend Yield (%)
490.8
50.00
0.36
•
PAT of Rs1.06b, up 155% YoY.
E: MOSL Estimates
•
6.3x FY08E EPS of Rs217.3. We recommend BUY with a twoyear price target price of Rs2,600 (12x FY08E EPS).
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
348
49
30 June 2006
349
SECTOR: ENGINEERING & CAPITAL GOODS
BUY - Rs207
30 June 2006
YEAR
END
3/06A
3/07E
3/08E
•
•
Stone India
Stone India
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
530
785
1,000
70
141
210
9.2
15.6
23.2
22.4
13.3
8.9
29.0
26.9
26.5
19.8
23.1
27.1
Net Sales
Change (%)
131.6
31.3
156.4
50.8
190.0
44.4
530.1
31.5
785.0
48.1
EBITDA
Change (%)
As % of sales
21.9
167.2
16.6
22.2
NA
14.2
42.0
91.8
22.1
86.0
554.8
16.2
185.0
115.1
23.6
2.5
1.2
0.7
-
(1.7)
1.4
13.1
12.3
3.0
1.5
1.0
-
7.7
5.2
14.0
13.1
25.0
10.0
3.0
-
Major Developments: Stone India plans to enter the ASEAN
rail market. Its first foray is in Malaysia. It has appointed
Telewira Tegas Sdn Bhd, Malaysia, as its exclusive agent. It has
also entered into a separate agreement with SMH Rail Sdn
Bhd, Malaysia, for technology transfer of CKD assembly and
testing of selective air brake components for the above project.
Interest
Depreciation
Other Income
It has also entered into an exclusive co-operation with
Goodyear Europe to introduce air springs for pneumatic
suspension system, which will gradually replace the
conventional suspension systems used in Indian Railways.
Currently, all the new generation metro rail coaches are fitted
with imported pneumatic suspension system.
PBT
Tax
18.9
-
47.9
3.6
38.5
9.0
100.2
3.7
153.0
12.2
Reported PAT
Adjusted PAT *
Change(%)
18.9
18.9
158.9
44.3
32.0
NA
29.5
29.5
56.1
96.5
83.4
NA
140.8
140.8
68.8
•
The company has entered into dividend list after a gap of 6
years. Dividend declared for FY06 is 10%.
•
Dividend
Dividend (%)
Dividend Yield (%)
-
-
•
For FY07, we expect net sales of Rs785m up 48% YoY, and PAT
of Rs141m, up 69% YoY.
•
At CMP of Rs207, the stock trades at 13x FY07E EPS of Rs15.6,
and 9x FY08E EPS of Rs23.2. We maintain BUY with a 15month target of Rs278 (12x FY08E EPS).
MOTILAL OSWAL
30 June 2006
E: MOSL Estimates
* For Extraordinary Items
MOTILAL OSWAL
350
50
30 June 2006
351
SECTOR: HOSPITALITY
TAJ GVK Hotels & Resorts
BUY - Rs191
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
TAJ GVK Hotels & Resorts
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
1,887.0
2,548.1
3,488.8
462.5
686.0
1,603.8
7.4
10.9
25.6
25.8
17.4
7.4
30.5
32.4
44.1
31.9
33.2
37.4
Net Sales
Change (%)
337.3
47.1
609.5
74.0
430.0
27.5
1,887.0
63.8
2,548.1
35.0
EBITDA
Change (%)
As % of sales
143.7
78.8
42.6
284.3
107.6
46.6
196.8
36.9
45.8
853.2
92.6
45.2
1,160.1
45.5
Interest
Depreciation
Other Income
6.1
21.4
1.3
12.1
39.4
0.4
12.0
40.0
1.0
39.7
121.0
6.9
38.0
130.0
5.0
117.5
43.0
233.1
79.0
145.8
48.0
699.5
237.0
997.1
311.1
74.5
74.5
84.8
154.2
154.2
117.0
97.8
97.8
31.3
462.5
462.5
109.3
686.0
686.0
48.3
141.45
100.00
1.05
84.87
60.00
0.63
Demand-supply situation of hotel rooms in Hyderabad has
become hugely favourable. The average occupancy rate in
Hyderabad during April-May 2006 stood above 82% with an
ARR of Rs8,600. Chandigarh continues to do well with ARR
crossing Rs5,500 and average occupancy above 85%.
Major developments: Taj GVK has planned a Rs4b expansion
plan at Hyderabad and Chennai to increase inventory to 1,400
rooms. All rooms are expected to commence commercial
operation in phases FY07 through FY10.
•
In 1QFY07, we expect net revenue of Rs430m, up 27.5% YoY,
and PAT Rs97.8m, up 31% YoY.
•
PAT Rs686m, up 48.3% YoY.
•
At CMP the stock trades at 17x FY07E EPS of Rs10.9 and 11x
two year price target of Rs300 (17.5x FY08E).
MOTILAL OSWAL
30 June 2006
PBT
Tax
Reported PAT
Adjusted PAT
Change(%)
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
352
51
30 June 2006
353
SECTOR: PAPER
Tamil Nadu Newsprint & Papers
BUY - Rs99
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
Tamil Nadu Newsprint & Papers
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
7,956.0
8,715.6
9,412.0
853.7
840.0
1050.1
12.3
12.1
15.1
8.0
8.1
6.5
14.2
13.4
14.8
12.2
12.1
13.8
Net Sales
Change (%)
1,793.0
19.5
EBITDA
Change (%)
As % of sales
347.4
107.3
19.4
508.5
116.8
24.3
42.7
152.2
48.0
-
Favourable paper cycle has enabled the company to raise
selling price of w&p (writing and printing) paper and
newsprint twice in FY06. Going forward, we believe, TNPL
will continue to benefit from favourable demand-supply
equation for w&p paper as well as newsprint.
FY06
1QA
FY06
4QA
FY07
FY06 FY07E
2,091.6 2,061.9
16.2
15.0
7,956.0
18.5
8,715.6
9.5
433.4
307.8
21.0
1,635.7
81.6
20.6
1,900.0
16.2
21.8
56.0
157.7
119.1
-
50.0
150.0
50.0
-
202.9
624.9
257.5
(50.7)
210.0
640.0
150.0
-
•
Major developments: None
Interest
Depreciation
Other Income
•
PBT
Tax
200.5
69.1
413.9
17.2
283.4
85.0
1,014.7
209.2
1,200.0
360.0
•
For FY07 we expect net sales of Rs8.7b, up 9.5% YoY and PAT
of Rs840m marginally down by 1.6% YoY.
•
price target of Rs145 (12x FY07E EPS).
Reported PAT
Adjusted PAT
Change(%)
131.4
131.4
51.7
396.7
396.7
45.2
198.4
198.4
51.0
805.5
856.2
125.6
840.0
840.0
(1.6)
215.06
27.50
2.79
234.61
30.00
3.04
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
354
52
30 June 2006
355
Tantia Construction
BUY - Rs135
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
Tantia Construction
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
1,622.9
3,000.0
4,500.0
58.1
161.5
275.8
13.5
10.4
17.7
10.1
13.0
7.6
26.9
17.9
24.1
13.5
14.9
17.6
Infrastructure spending as a percentage to GDP has been low
in India ~3% and is expected to post a 15% CAGR over the
next four-five years. Tantia Construction is well placed to
take advantage of this activity. It has a strong order book of
Rs6.5b (4x FY06 revenue).
Major developments: The company has recently got two
projects 1. Foundation work for upcoming 8,000 tcd sugar mill at
Balrampur, awarded by Balrampur Chini Mills - project
value is Rs400m and completion period six months;
2. Project for construction of superstructure work for 1km
bridge over river Krishna - project value is Rs205m and
completion period 24 months.
•
•
For FY07, we expect net sales of Rs3b, up 85% YoY and PAT of
Rs162m, up 177% YoY.
•
At CMP, the stock trades at 13x FY07E earnings of Rs10.4 and
~8x FY08E earnings of Rs17.7. We maintain a BUY with an
18-month price target price of Rs270 (15x FY08E).
MOTILAL OSWAL
30 June 2006
FY06
4Q
FY07
FY06 FY07E
Net Sales
Change (%)
-
657.8
-
600.0
-
1,622.9
57.3
3,000.0
84.8
EBITDA
Change (%)
As % of sales
-
52.2
7.9
70.7
11.8
176.9
51.5
10.9
353.4
99.8
11.8
Interest
Depreciation
Other Income
-
24.0
7.1
1.6
22.2
27.5
12.5
1.0
-
90.5
25.1
3.2
26.1
110.0
64.5
3.0
-
PBT
Tax
-
44.9
21.2
31.7
3.5
90.6
6.2
181.9
20.4
Reported PAT
Adjusted PAT
Change(%)
-
23.7
1.5
-
28.2
28.2
-
84.4
58.3
125.6
161.5
161.5
177.2
15.56
10.00
1.07
23.34
15.00
1.60
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
356
53
(Rs Million)
FY06
1Q
30 June 2006
357
SECTOR: ENGINEERING
TRF
NEUTRAL - Rs284
30 June 2006
YEAR
END
03/05A
03/06A
03/07E
TRF
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
FY06
1Q
FY06
4Q
FY07
FY06 FY07E
2000.6
2165.6
2800.0
39.6
73.4
130.8
7.2
13.3
23.8
39.5
21.3
12.0
11.0
16.5
24.5
10.3
16.1
23.3
Net Sales
Change (%)
403.4
(10.3)
793.4
20.9
440.0
9.1
2,165.6
8.2
2,800.0
29.3
EBITDA
Change (%)
As % of sales
(3.8)
(116.4)
(0.9)
77.6
60.7
9.8
36.0
NA
8.2
172.5
64.8
8.0
251.8
46.0
9.0
11.9
3.4
0.2
-
10.6
3.1
0.8
0.7
12.0
3.2
0.2
-
43.4
13.1
2.4
2.4
55.0
15.0
10.0
1.0
•
Investment in capital goods industry continues to be robust.
New orders to be finalised in coal handling, new steel projects
and port handling should help keep order book healthy.
•
Major Developments: One of the orders received in the
current quarter is a conveyor system and equipment for Tata
Steel worth Rs590 million.
Interest
Depreciation
Other Income
•
Steel prices are on the upturn in the current quarter, which
is a cause of concern.
PBT
Tax
(18.9)
-
64.0
23.6
21.0
7.0
116.0
45.0
190.8
61.0
Reported PAT
Adjusted PAT
Change(%)
(18.9)
(18.9)
(386.4)
40.4
41.1
54.5
14.0
14.0
NA
71.0
73.4
85.4
129.8
130.8
78.2
Dividend
Dividend (%)
Dividend Yield (%)
24.65
40.00
1.41
30.81
50.00
1.76
E: MOSL Estimates
• Cash flow from operations for FY06 was very healthy at
Rs265m as against negative cash flow for the preceding 4
years. The company has repaid short term borrowings to the
tune of Rs227.8m.
•
PAT of Rs14m, against a loss of Rs18.9m.
•
For FY07, we expect net sales of Rs2.8b, up 29% YoY, and PAT
of Rs131m, up 78.2% YoY.
•
At CMP of Rs284, the stock trades at 12x FY07E EPS of Rs23.8.
In our preview dated 6 April 2006, we had recommended
Book Profit on the stock at Rs426. We are NEUTRAL on the
stock till we have better visibility of FY08E.
MOTILAL OSWAL
30 June 2006
MOTILAL OSWAL
358
54
30 June 2006
359
SECTOR: SUGAR
Ugar Sugar
BUY - Rs26
30 June 2006
YEAR
END
09/05A
09/06E
09/07E
(Rs Million)
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E SEPTEMBER
FY05
3Q
FY06
2Q
3330
3967
5000
120
390
520
1.3
4.2
5.8
19.5
6.2
4.5
20.9
41.5
37.7
12.8
22.7
27.1
Net Sales
Change (%)
727.0
32.8
1,032.6
(5.3)
1,000.0
37.6
3,330.0
44.9
3,966.8
19.1
EBITDA
Change (%)
As % of sales
(44.9)
(191.4)
(6.2)
262.4
11.0
25.4
170.0
17.0
315.9
(21.2)
9.5
631.9
100.0
15.9
25.5
28.1
7.6
-
38.5
26.1
13.1
12.2
30.0
27.5
7.0
-
122.8
112.3
32.4
-
109.4
106.4
35.0
12.2
PBT
Tax
(90.9)
(37.5)
198.7
15.8
119.5
30.0
113.2
(6.5)
438.9
61.6
Reported PAT
Adjusted PAT
Change(%)
(53.4)
(53.4)
172.4
182.9
195.1
24.3
89.5
89.5
-
119.7
119.7
35.7
377.3
389.5
225.4
18.00
20.00
0.77
36.00
40.00
1.54
•
Ugar's total crushing capacity is expected to increase from
13,5000tcd in SY2005-06 to 16,750tcd in SY2006-07. This will
help it to crush about 2.4m tons of cane (1.87m ton in SY05-06).
•
Major Developments: The government has allowed duty free
price of imported sugar is over Rs23 per kg, much higher
than the current domestic price of 18-19 Rs/kg.
•
Ugar Sugar
Interest
Depreciation
Other Income
The company is increasing capacity at Ugar from 10,000tcd
to 12,000tcd by installing balancing equipments at a cost of
Rs50m (greenfield expansion would cost Rs500m). Ship sugar
project has got postponed and is expected to start commercial
production in September 2006.
•
In 3QFY06, we expect revenue of Rs1b, up 38% YoY. PAT is
expected to be Rs90m (loss of Rs53m in 2QFY06).
•
Considering lower sugar prices, we have downgraded our
estimates for FY06 and FY07. For FY06 (September ending),
we expect revenues of Rs4b (earlier projection Rs4.8b) up
19% and PAT at Rs390m (Rs506m).
•
FY07E EPS of Rs5.8. We recommend BUY on the stock with a
price target of Rs46 (8x FY07E).
MOTILAL OSWAL
30 June 2006
Dividend
Dividend (%)
Dividend Yield (%)
E: MOSL Estimates
MOTILAL OSWAL
360
55
FY06
FY05 FY06E
30 June 2006
361
SECTOR: PIPES
Welspun Gujarat Stahl Rohren
BOOK PROFIT - Rs68
NET SALES
(RS M)
PAT
(RS M)
EPS
(RS)
P/E
(X)
ROE
(%)
ROCE
(%)
Y/E MARCH
18,242.0
30,000.0
35,000.0
595.0
1,262.0
1,982.0
4.6
8.4
13.3
14.6
8.0
5.1
12.4
20.4
24.3
10.1
12.4
15.8
Net Sales
Change (%)
30 June 2006
YEAR
END
03/06A
03/07E
03/08E
•
•
Welspun Gujarat Stahl Rohren
EBITDA
Change (%)
As % of sales
Welspun Gujarat Stahl Rohren (WGSR) is the only pipe
manufacturer in India with a capacity to produce large
diameter pipes beyond 48" OD upto 60" OD. Its current order
book stands at Rs25b.
In 1QFY07, we expect net sales of Rs5b, up 52.3% YoY and
PAT of Rs136.8m, down 13.4% YoY.
•
For FY07, we expect net sales of Rs30b, up 64.5% YoY and PAT
(post pref. dividend) of Rs1.26b, up 112% YoY.
•
At CMP, the stock trades 8x FY07E EPS of Rs8.4 and 5x FY08E
EPS of Rs13.3. We maintain Book Profit.
3,284.0
221.3
30 June 2006
475.5
45.9
9.5
1,536.0
124.9
8.4
2,782.0
81.1
9.3
178.0
122.0
20.0
-
419.0
352.0
138.0
-
480.0
500.0
100.0
-
PBT
Tax
239.0
81.0
255.0
61.0
195.5
58.7
903.0
290.0
1,902.0
622.0
Reported PAT
Adjusted PAT
Change(%)
158.0
158.0
162.9
194.0
194.0
977.8
136.8
136.8
(13.4)
613.0
595.0
81.4
1,280.0
1,262.0
112.0
-
-
MOTILAL OSWAL
56
6,440.0 5,000.0 18,242.0 30,000.0
86.1
52.3
75.7
64.5
178.0
122.0
3.0
-
Dividend
Dividend (%)
Dividend Yield (%)
362
FY07
FY06 FY07E
80.0
75.0
68.0
-
E: MOSL Estimates
* PAT adjusted for preference dividend
MOTILAL OSWAL
FY06
4Q
326.0
552.0
507.1 18,300.0
9.9
8.6
Interest
Depreciation
Other Income
Major development : WGSR has entered into a joint venture
with Sanghi Industries to develop a port facility at Dahej.
This would help WGSR to utilize the facility to meet its export
obligation.
•
(Rs Million)
FY06
1Q
30 June 2006
363
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Mid Cap Ideas Quarterly Report - June06 Part-2.p65

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