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Showing posts from 2010

IRB Infrastructure Developers

IRB Infrastructures is a leading player in the transportation segment with expertise in constructing and operating large BOT projects. Company complements its BOT vertical by executing EPC and O&M (operation and maintenance) portion of its BOT projects. IRB has second largest BOT portfolio in the country with a total length of around 1250km as BOT operator.

With its dominant position in the road BOT projects, company is well equipped to benefit from upcoming order inflows in the road segment from NHAI. Along with maintaining and operating road assets, going forward company would also be developing and operating a Greenfield airport and will also diversify into real estate development.

Strong revenue growth and excellent margins are likely to drive growth in net profits at a CAGR of 16% between FY10-FY12. At current price of Rs.224 stock is trading at 16.4x and 14.3x P/E and 9.5x and 8.3x EV/EBITDA on FY11 and FY12 estimates. Long term investors can buy the stock with a target pr…

Infotech Enterprises

Result Update: Infotech Enterprises.

Infotech's results were a mixed bag, while revenues were higher than expected, EBIDTA margins once again disappointed.Consequently, PAT for 2QFY11 was marginally lower and EMI volumes were up by 13% and UTG reported a 6% organic growth, which is encouraging.

Margins were flat (organically) QoQ, which was disappointing in light of the severe fall witnessed in 1Q. 刼 The company had to resort to further increments for scarce resources. This validates concerns about mid sized companies facing pressures on salaries due to strong hiring by larger peers in a buoyant sector.

Overall, earnings estimates for FY11 is expected to be Rs.13.2 v/s Rs.14.1 earlier and FY12 EPS estimates to be Rs.16.8. Hence long term investors can wait for substantial declines before entering this stock.

Edelweiss Capital

Results Update: Edelweiss Capital Ltd.

Key factors from the results:

• Capital market volumes to remain muted for some time, while pressure on brokerage yield will continue to impact the core brokerage fee income.
• Anagram Capital acquisition to become effective from Q2FY11; consolidation will boost ECL's core brokerage revenue for FY11.
• Investment banking business expected to maintain a healthy growth over FY11-12; Scaling up of financing book to aid steady interest income growth.
• Operating margins improved sequentially during Q1FY11 at 31.8% from 28.6% in Q4FY10 while PAT margin improved to 22.3% from 20.2% in Q4FY10; consolidation of Anagram will further enhance bottom-line growth going forward.

Based on the above developments , the stock can be accumulated on declines with a price target of Rs. 55.

Madhucon Projects

Result Update: Madhucon Projects.

• Madhucon Projects Ltd reported 43% YoY growth in revenues for Q1FY11 which was better than market estimates. This was led by strong order book.

• Operating margins stood at 10.68% for Q1FY11, marginally lower than the estimates. Company expects to maintain margins in the range of 11% for the full year.
• Net profits registered a growth of 3% YoY and are impacted by decline in margins in comparison with last year.
• At current price of Rs 153, stock is trading at 17x and 14.6x P/E for FY11 and FY12 respectively. Adjusted with BOT assets valuations, stock is trading at 6.3x and 5.4x P/E for FY11and FY12 respectively.

• Hence longterm investors can buy on declines a price target of Rs 186 on sum of the parts methodology on FY11 estimates.

Automobile Sector - Two Wheeler Industry

Sector Update - Two Wheeler Industry:
2-Wheeler majors continued their streak of posting strong monthly numbers for the month of May 2010. Auto numbers posted by 2W players in the month of May 2010 reinforce our view of a strong year ahead for the players in the 2W space.
New launches in the past few months are also playing a critical role in expansion of the overall 2W market. Thus despite competition, all companies continued to grow at a fairly strong pace. With the onset of monsoon, one can expect cyclical slowdown in volumes on sequential basis, but YoY volume growth prospects are optimistic.
Increased government spending in the rural areas coupled with improved farm income will continue to remain critical growth driver for 2W volumes. The domestic 2W volumes are expected to grow by 15% in FY11E. Bajaj Auto and TVS Motor are top picks in the 2W space.

Bajaj Auto

Bajaj Auto - Results Update.
Strong sequential volume growth helps Bajaj maintain margins despite raw material pressures.

Bajaj reported 3QFY10 PAT of Rs4.75 bn (up 189% yoy and 18% qoq), was in line with our estimate of Rs4.69 bn. 3QFY10 EBITDA margin at 22.9% grew 760bps yoy and 10 bps qoq versus 22.4%. The margin upside was driven by higher-than-expected other operating income, which includes export incentives. Average realizations declined 4% on a yoy and qoq basis, driven by the higher proportion of the newly launched Discover 100cc. Raw material costs as a percentage of sales increased by a larger-than-expected 300 bps, some of which must have been driven by the lower realization. 3QFY10 volumes grew 64% yoy led largely by the newly launched Discover100cc volumes and improvement in export and 3-wheeler volumes. Bajaj Auto will likely benefit from the Pulsar 135cc launched in December going forward on a sequential basis.

New launches to drive domestic volume growth in FY2011E; expec…