Indian stock market and companies daily report (May 24, 2012, Thursday)

The domestic markets are expected to open in green tracking positive development on domestic front. The government has raised petrol price by massive (~10%) Rs.7.54/litre in order to recover losses to oil marketing companies (OMCs), which were selling petrol at lower prices. With this petrol price hike, the under-recovery (loss) due to selling petrol price at subsidized rates is expected to be lower by ~Rs.7,000cr for FY2013, positive for OMCs and ONGC. This unprecedented steep increase in petrol prices by the government signals its intention to lower fiscal burden through bold policy measures.
US markets, after showing a notable move to the downside in morning trading on Wednesday due to continued worries about the financial situation in Europe, which came as European leaders held a closely watched summit in Brussels. However, stocks staged a significant recovery over the latter part of the trading day which was attributed to reports out of the European summit regarding the steps that the leaders are willing to take to boost economic growth. European markets finished solidly to the downside on Wednesday reversing the gains from the previous two trading days on the back of concerns over the situation in Greece.
Indian shares fell on Wednesday, extending the previous session's sharp sell-off, as the rupee continued its downward spiral, breaching the 56 mark against the dollar amid a weaker euro and persisting domestic concerns over slowing economic growth and a widening fiscal deficit.

Markets Today
The trend deciding level for the day is 15,932 / 4,831 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,018 – 16,087 / 4,858 – 4,881 levels. However, if NIFTY trades below 15,932 / 4,831 levels for the first half-an-hour of trade then it may correct up to 15,863 – 15,777 / 4,808 – 4,781 levels.

Government raises petrol price by Rs.7.54/litre
The government has raised petrol price by massive (~10%) Rs.7.54/litre in order to recover losses to oil marketing companies (OMCs), which were selling petrol at lower prices. Without this hike, OMCs would stand to lose Rs.8,000cr in FY2013 (compared to Rs.4,870cr in FY2012) considering the 10% depreciation in INR against USD during the past three months. With this petrol price hike, the underrecovery (loss) due to selling petrol price at subsidized rates is expected to be lower by ~Rs.7,000cr for FY2013, which in turn would lower subsidy burden on upstream oil companies such as ONGC and GAIL. Hence it would be positive for OMCs and ONGC. However, at current crude prices, OMCs continue to lose Rs.512cr per day mainly due to selling diesel, kerosene and domestic LPG at lower prices. Nevertheless, the unprecedented steep increase in petrol prices by the government signals its intention to lower fiscal burden through bold policy measures. Any further steps by the government such as hike in prices of diesel, kerosene and LPG could be positive for OMCs and upstream companies.

Result Reviews
BHEL (CMP: Rs.208 / TP: - / Upside -)
BHEL announced a mixed set of 4QFY2012 results. The company reported a 6.6% increase in its top line to Rs.19,589cr, lower than our expectation of Rs.20,954cr. The quarter saw strong EBITDA margin expansion by 184bp yoy to 25.2%, which led to a 15% yoy increase in EBITDA, higher than our expectation. PAT for the quarter grew by 20.8% yoy to Rs.3,380cr (Rs.2,798cr), which was also higher than our expectation. At the CMP of Rs.208, the stock is trading at 8.8x and 8.6x on our FY2013E and FY2014E earnings estimates, respectively. Currently, we remain our Neutral view on the stock. We will revise our estimates and release a detailed results review shortly.
Tech Mahindra (CMP: Rs.612/ TP: Under review/ Upside: -)
Tech Mahindra reported a muted set of 4QFY2012 results. Dollar revenue came in at US$281.6mn, down 2.5% qoq, due to a decline in revenue from two clients in India because of cancellation of 2G license. Dollar revenue from BT grew by 3.1% qoq because BT did some one-time discretionary spend during the quarter. Revenue from non-BT accounts declined by 5.5% qoq. In rupee terms, revenue came in at Rs.1,419cr, down 1.8% qoq. EBITDA margin grew by 63bp qoq to 16.8%, aided by increased utilization level to 74% in 4QFY2012 from 73% in 3QFY2012. The company booked exceptional loss of Rs.68cr in the quarter as provisions made for uncovered dues from the above mentioned two parties which are winding their operations in India. Adjusted PAT, including share from Satyam, came in at Rs.302cr. Overall results were weak. The only growth driver for the company is non-BT business as BT is retendering its contracts. The stock is currently under review.
Tata Global (CMP: Rs.108/ TP: Rs.136/ Upside: 26%)
During 4QFY2012, Tata Global posted 10.7% yoy growth in consolidated net sales to Rs.1,724cr, aided by improved performance in most of its major markets coupled with foreign exchange translation impact. OPM stood at 8%, down 30bp yoy. On the bottom-line front, the company’s net profit fell by 36.4% yoy to Rs.54.2cr due to exceptional expense of Rs.40cr in 4QFY2012 as against exceptional gain of Rs.56cr in 4QFY2011. Exceptional expenses for the quarter related to cost incurred for long-term initiatives and new projects and loss on assets related to discontinued business initiatives, among others. We maintain our Buy recommendation on the stock with a target price of Rs.136.
Lakshmi Machine Works (CMP: Rs.1,521 / TP: Rs.2,609 / Upside: 72%)
Lakshmi Machine Works (LMW) announced below par numbers for 4QFY2012. The company’s net sales declined by 5.4% qoq and 6.1% yoy to Rs.502cr on the back of lower sales in the textile machinery division. The textile machinery division registered a 12.3% qoq and 8.9% yoy decline in revenue to Rs.413cr. The company’s others segment, however, witnessed 30.4% qoq and 7.4% yoy growth in revenue to Rs.93cr. The company’s EBITDA declined by 25.1% yoy to Rs.49cr on the back of lower revenue and margin contraction. EBITDA margin contracted by 246bp yoy to 9.7% on account of higher other expenditure. Other expenditure as a percentage of sales increased to 19.4% in 4QFY2012 compared to 14.5% in 4QFY2011. PAT declined by 84.2% yoy to Rs.7cr on the back of margin contraction, prior-period finance cost of Rs.5cr and higher tax provision due to prior-period tax adjustments of Rs.16cr, resulting in tax rate of 78.1% of PBT in 4QFY2012 vs. 25.6% of PBT in 4QFY2011. Consequently, PAT margin also declined by 687bp yoy to 1.4% (8.3%). Adjusted for prior-period adjustments, PAT came in at Rs.28cr, down 36.4% yoy. We currently have a Buy recommendation on the stock. We may revise our estimates and target price post an interaction with the management.
Jyothy Laboratories (CMP – Rs.192, TP – Rs.248, Upside: 29%)
For 4QFY2012, JLL reported a healthy set of numbers, ahead of our estimates. The company's top line (standalone) grew by 37.5% yoy to Rs.219cr, higher than our estimate of Rs.192cr for the quarter. This was mainly driven by volume growth coupled with improved realization. The company’s EBITDA margin improved by 614bp yoy to 16.6% for the quarter; however, it remained flat on a qoq basis. Though raw-material cost witnessed a sharp jump, the decrease in employee cost, which was mainly because of the reversal of incentives provided to the sales staff, helped the operating margin to maintain the previous level. Interest cost for the quarter increased to Rs.13.4cr. The company reported growth of 25.7% yoy in its profit, which came in at Rs.28cr. We maintain our Buy recommendation on the stock with target price of Rs.248 based on SOTP valuation.

Result Previews
Madras Cements
Madras Cements is set to declare its 4QFY2012 results. We expect the company to post top-line growth of 31.4% yoy to Rs.902cr on account of higher volumes and better realizations. OPM is expected to grow by 438bp yoy to 29.1%. We expect the company to post 65.8% yoy growth in its bottom line to Rs.106cr. We continue to remain Neutral on the stock.
TVS Motor
TVS Motor is scheduled to announce its 4QFY2012 results. We expect the company’s top line to report modest ~8% yoy growth to Rs.1,733cr, driven primarily by ~6% yoy growth in net average realization. Volumes during the quarter remained subdued (up ~2% yoy) as motorcycle volumes declined by ~11% yoy amidst rising competition and moderating demand environment. EBITDA margin is expected to expand by ~80bp yoy to 6.4%. However, the bottom line is expected to jump by 31% yoy to Rs.55cr mainly due to lower tax rate and improvement in operating margin. We maintain our Buy recommendation on the stock with a target price of Rs.55.

Economic and Political News
- Rupee breaches 56/dollar, despite RBI action
- 25% of loans to SEBs restructured
- June FTP set to bring stability to farm export

Corporate News
- RIL-led group gives up D4 gas block
- Aurobindo Pharma gets US nod for generic anti-HIV drug
- Suzlon to commission 138-MW project for South Africa

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Indian stock market and companies daily report (May 22, 2012, Tuesday)

The domestic markets are expected to open in green tracking positive cues from global markets. Germany’s finance minister said the nation will focus on measures to boost Europe’s economic growth, while hopes for an economic stimulus plan for China brightened sentiment as the country pledged its proactive fiscal policy and prudent monetary policy yesterday to shore up the world’s second-largest economy.
US markets rebounded as traders picked up stocks at reduced levels following the recent downward trend, which pulled the major averages down to four-month closing lows on Friday. However, trading activity was somewhat subdued, as lingering concerns about Europe and a lack of major US economic data kept some traders on the sidelines. Trading today could be impacted by the release of the National Association of Realtor's monthly report on existing home sales. Indian shares erased most of their early gains on Monday, as a weakening rupee, which was moving towards its record low of 55.04 against the dollar, and the slashing of India's 2012 economic growth forecast to 6.3% from the earlier 6.9% by Morgan Stanley gave way to some late-session profit taking.

Markets Today
The trend deciding level for the day is 16,210 / 4,911 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,271 – 16,359 / 4,933 – 4,960 levels. However, if NIFTY trades below 16,210 / 4,911 levels for the first half-an-hour of trade then it may correct up to 16,122 – 16,062 / 4,884 – 4,862 levels.

L&T bags orders worth Rs.7,44cr
Larsen & Toubro's (L&T) construction arm has bagged new orders worth over Rs.7,44cr under various divisions so far in 1QFY2013. The power transmission and distribution segment secured new orders worth Rs.479cr from key customers, including orders for electrical, instrumentation and automation works from National Mineral Development Corporation (NMDC), Jindal Power Limited and NTPC. An order has been secured from Power Grid Corp. for the construction of overhead transmission lines from Barh in Bihar to Gorakhpur in Uttar Pradesh. In the water and solar business, L&T construction has secured orders worth Rs.265cr from various customers for the construction of a solar thermal plant in Rajasthan and an EPC contract for the construction of a pumping station and allied works at Botad Branch Canal from Paliyad to Goma in Bhavnagar District, Gujarat.
At the CMP of Rs.1,189, the stock is trading at PE of 15.6x FY2014E earnings, which is below the historical trading multiple for L&T. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,553. Hence, we maintain our Buy recommendation on the stock.

Result Reviews
Nalco (CMP: Rs.61 / TP: Under Review)
Nalco reported disappointing 4QFY2012 results. The company’s net sales declined by 2.0% yoy to Rs.1,785cr (below our estimate of Rs.2,524cr). Raw-material cost as a percentage of net sales stood at 13.9% in 4QFY2012 compared to 12.2% in 4QFY2011. Further, power cost as a percentage of net sales stood at 28.5% in 4QFY2012 compared to 25.7% in 4QFY2011. Hence, EBITDA decreased significantly by 32.2% yoy to Rs.306cr and EBITDA margin contracted by 760bp yoy to 17.15%. Other income, however, grew by 63.9% yoy to Rs.159cr in 4QFY2012. Consequently, net profit decreased by 7.5% yoy to Rs.282cr (significantly above our estimate of Rs.115cr). We recommend Reduce on the stock; our target price is under review.

Economic and Political News
- RBI imposes restrictions on forex dealers as rupee breaches 55-mark
- Government to provide Rs.38,500cr subsidy to oil companies for 4QFY2012
- Lokayukta court orders probe against Yeddyurappa, Nirani
- White paper on black money a damp squib, states the obvious

Corporate News
- COT panel sets 2G price 17% above TRAI’s
- BHEL bags contract for 1,320MW Solapur power project
- JSW Steel output up 35% in April at 715,000 tonnes
- Dr. Reddy's launches much-delayed acidity drug in the U.S.
- Government fixes turnover target of Rs.68,000cr for MMTC

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Indian stock market and companies daily report (May 16, 2012, Wednesday)

The domestic markets are expected to open in red tracking negative opening in Asian markets. Asian markets turned in a mixed performance yesterday, as worries prevailed that the European debt crisis could spiral out of control and weigh on global growth if Greece were to exit the euro zone and default on its debt.
U.S markets declined yesterday as investors worried about political situation in Greece, which is headed for a new round of elections after lawmakers failed to form a coalition government. Moody's announcement that it had downgraded Italian banks also weighed on markets. Meanwhile, upbeat U.S. economic data helped to limit the downside for the markets as a report showed that Wells Fargo Housing Market Index jumped to 29 in May from 24 in April. Also, general business conditions index jumped to 17.1 in May from 6.6 in April.
Meanwhile, Indian markets rebounded on Tuesday as falling oil prices and the strengthening of rupee from a near record low against the dollar due to intervention from the RBI encouraged investors to cherry-pick battered stocks. Investors today will watch out for industrial production data of the U.S. for April 2012 (Bloomberg estimate – 0.6%) to be released today.

Markets Today
The trend deciding level for the day is 16,274 / 4,922 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,425 – 16,521 / 4,976 – 5,009 levels. However, if NIFTY trades below 16,274 / 4,922 levels for the first half-an-hour of trade then it may correct up to 16,177 – 16,027 / 4,889 – 4,836 levels.

Tata Motors reports flat global volumes for April 2012
Tata Motors (TTMT) reported flat global volume for April 2012 to 87,377 units (down 37% mom), led largely on account of a decline in global commercial vehicle (CV) volumes and lower-than-expected Jaguar and Land Rover (JLR) volumes. Global CV volumes declined by 8% yoy to 38,008 units due to an 8% yoy decline in domestic CV volumes. Global passenger vehicles, however, reported healthy volume growth of 7% yoy to 49,369 units, driven primarily by JLR performance. JLR volumes grew by 29.4% yoy to 25,143 units, led by 17% and 31.7% yoy growth in Jaguar and Land Rover sales, respectively. Nonetheless, JLR volumes for April 2012 were lower than expected and it reported a significant mom decline of 31%. At the current market price of Rs.290, the stock is trading at 7.0x and 4.1x FY2014E earnings and EV/EBITDA, respectively. We maintain our Accumulate rating on the stock with an SOTP-based target price of Rs.328.

Result Reviews
Shree Cement (CMP: Rs.2,662 / TP: - / Upside: -)
Shree Cement’s (SRCM) 4QFY2012 top line rose by 38.1% yoy during the quarter to Rs.1,478cr, in-line with our estimates. The cement business posted 25.1% yoy growth in its net sales to Rs.1,189cr on account of 16.7% yoy growth in dispatches to 3.36mn tonnes and 7.2% yoy growth in realization to Rs.3,794/tonne. OPM rose by 64bp to 25.3% on account of better cement realization, despite increased freight costs. The company’s bottom line rose by 73.8% yoy to Rs.115cr, on accountof superior operating performance and higher other income of Rs.77cr in 4QFY2012 (vs. Rs.20.7cr in 4QFY2011), which included Rs.37cr of write back of provisions relating to the previous years. We maintain our Neutral view on the stock.
Patel Engineering (CMP: Rs.90 / TP: - / Upside: -)
For 4QFY2012, Patel Engineering (Patel) posted a 14.5% yoy decline on the topline front to Rs.1,346cr. The company’s EBITDA margin for the quarter increased by 110bp on a yoy basis and came in at 9.5%. Interest and depreciation cost for the quarter came in at Rs.84cr and Rs.23cr, respectively. On the earnings front, the company posted a decline of 70.1% on a yoy basis to Rs.9cr, owing to poor performance on the revenue front and higher tax rate (52%). We maintain our Neutral view on the stock.
Dishman Pharma (CMP: Rs.43 / TP: Rs.92 / Upside: 114%)
For the quarter, Dishman Pharma (Dishman) reported sales below our expectations. However, the company’s net profit came in higher than expectations. For the quarter, the company posted sales of Rs.350cr, registering 1.7% yoy growth. On the operating front, gross and operating margin came in at 65.4% and 23.5%, respectively. OPM came in above our expectation of 17.8%. This aided net profit to come in at Rs.31.4cr, in comparison to Rs.28.5cr estimated for the quarter. Currently, the stock is valued at 3.3x FY2014E earnings. We maintain our Buy rating on the stock with a target price of Rs.92.
JK Tyre & Industries (CMP: Rs.78 / TP: Under Review /Upside: -)
JK Tyre & Industries (JKI) reported net profit of Rs.86cr for 4QFY2012 as against loss of Rs.21cr in 3QFY2012, led mainly on account of extraordinary income of Rs.81cr. For 4QFY2012, net sales grew by healthy 13.2% yoy (7.1% qoq) to Rs.1,524cr. Operating performance registered a sharp improvement with EBITDA margin expanding by better-than-expected 222bp yoy (264bp qoq) to 7.7%, driven mainly on account of improvement in raw-material cost (130bp yoy) as natural rubber prices witnessed a decline of 15.2% yoy during the quarter. As a result, operating profit jumped by 58.8% yoy (62.4% qoq) to Rs.118cr. However, a 55.3% yoy increase in interest expense to Rs.47cr resulted in adjusted net profit of Rs.31cr (Rs.17.5cr in 4QFY2011).
On the consolidated front, net sales witnessed 16.2% yoy growth to Rs.6,947cr, led by 16.8% and 13.4% yoy revenue growth in India and Mexico, respectively. However, the company reported net loss of Rs.32cr on account of extraordinary expense of Rs.47cr during the year. The stock rating is currently under review.

Result Previews
JK Lakshmi Cement
JK Lakshmi Cement (JKLC) is set to declare its 4QFY2012 results. For the quarter, we expect JKLC to post 5.9% yoy growth in its top line to Rs.439cr, driven by volume growth and higher realization. The company’s OPM is expected to increase by 87bp yoy to 19.4%. The bottom line is expected to register growth of 36% yoy to Rs.43.4cr. We maintain our Buy view on the stock with a target price of Rs.79.

Economic and Political News
- A Raja granted bail by Delhi court in 2G case
- DTC Bill to be introduced in monsoon session
- Electronics market to reach Rs.20lakh cr by 2020: Assocham
- India gold imports down 33% in April
- Kerala plans to raise Rs.1lakh cr for high speed rail corridor project

Corporate News
- Adani Group plans to bid for transmission projects
- Bharti Airtel under ED lens for alleged money laundering
- ITC's Sri Lankan arm buys land for hospitality project
- IVRCL bags orders worth Rs.653cr

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Indian stock market and companies daily report (May 15, 2012, Tuesday)

The domestic markets are expected to open in red tracking negative opening in Asian markets. Most of the Asian markets ended lower yesterday as concerns over political uncertainty in Europe partially offset the positive sentiment generated by a weekend move by China's central bank to cut banks' reserve requirement ratio. U.S markets closed at more than three-month lows yesterday as investors worried about political uncertainty in Greece, as the debt-plagued nation could be forced to hold a new round of elections due to lawmakers' inability to form a coalition government. Also, China’s move of cut in reserve ration requirements to inject more liquidity into the system added to recent concerns about the outlook for growth in China.
Meanwhile, Indian stock markets extended losses for a fifth consecutive session on Monday after government data showed that the India's headline inflation accelerated to 7.23% in April, making it difficult for the RBI to moderate monetary policy. Markets would now watch out for retail sales growth data of the U.S. for April 2012 (Bloomberg estimate – 0.1%) to be released today.

Markets Today
The trend deciding level for the day is 16,244 / 4,913 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,363 – 16,509 / 4,952 – 4,996 levels. However, if NIFTY trades below 16,244 / 4,913 levels for the first half-an-hour of trade then it may correct up to 16,097 – 15,978 / 4,869 – 4,830 levels.

Primary and fuel inflation rises as manufacturing inflation remains stable
Wholesale price-based inflation for the month of April, 2012 came in at 7.2% yoy, slightly higher than 6.9% yoy levels registered in March, 2012. The inflation levels of February, 2012 were revised upwards from 6.95% yoy to 7.39% yoy. The April, 2012 inflation levels of 7.2% yoy were above the Bloomberg estimate of 6.7%. Core (non-food manufacturing) inflation – which the RBI tracks closely – remained stable at 4.56% yoy compared to 4.53% yoy in March, 2012.
Primary articles inflation remained at elevated levels of 9.7% yoy, c.10bp higher than the 9.6% yoy witnessed in March, 2012. The food articles inflation which had risen to 9.9% yoy in March 2012, jumped c60bp to 10.5% yoy for April 2012. The mom annualized growth in food inflation index stood at 58.5% as against 27.5% registered in February 2012 on account of higher prices of few fruits and vegetables. The Non-food articles inflation, which was as high as 18.2% yoy in August, 2011, came in at 1.6% yoy (-1.6% yoy in March, 2012). However, over March, 2012, the Non-food articles index rose by 3.3% mom (annualised growth of 39.3%) on account of higher prices of raw silk, rape and mustard seed, sesamum, soyabeen, and mesta and niger seed amongst others. Inflation for minerals registered an uptick to 66.8% yoy compared to 28.6% yoy in February, 2012.
Fuel & power inflation (11.0% yoy) witnessed annualized mom growth of 21.4% over March 2012. Coal Index (13.9% yoy) witnessed annualized mom growth of 161.9% over March 2012 (0.4% yoy), mainly on account of higher prices of non coking coal. The electricity index remained unchanged mom. Mineral oil inflation too moderated further to 13.7% yoy levels (lowest in 19 months). Although, electricity tariff hikes across different states are yet to be accounted for in inflationlevels, we expect RBI to have already factored the same in its calculations and hence do not expect any possible deviation in RBI’s monetary policy decisions based on possible uptick in electricity inflation index. The fuel hikes are also on cards; however with global outlook remaining grim, any further rise in fuel inflation levels is hence, in our view, expected to be capped.
Manufactured products which have a weightage of c.65% in the overall WPI inflation inched upwards slightly to 5.1% yoy from 4.9% - the lowest levels in more than 2 years observed in March, 2012. The annualized mom growth in manufacturing index stood at 11.8% in April, 2012. The core inflation (4.56% yoy for April 2012 compared to average of 7.3% yoy in FY2012) which the RBI tracks closely for its monetary policy decisions showed stability remained stable at 4.56% yoy compared to 4.53% yoy witnessed in March 2012, thus strengthening the hopes of further monetary easing by the central bank.

Result Reviews
L&T (CMP: Rs.1,160 / TP: Rs.1,641 / Upside: 42%)
Larsen and Toubro (L&T) posted a good set of numbers for 4QFY2012, which were broadly in-line with our expectations; however, the company disappointed on the order inflow front. On the top-line front, L&T reported decent top-line growth of 20.0% yoy to Rs.18,461cr, marginally below our estimate of Rs.18,945cr. On the EBITDA front, performance was as per our expectations, with the company reporting a yoy dip of 130bp to 13.9% against our expectation of 13.7%. On the bottom-line front, L&T reported yoy growth of 13.9% to Rs.1,920cr, marginally higher than our estimate of Rs.1,862cr, owing to exceptional gain (Rs.55cr) and lower tax rate (26.9%).
As of 4QFY2012, L&T’s order backlog stands at yoy growth of 11.0% to Rs.1,45,700cr. Order inflow for the quarter was disappointing at Rs.21,159cr (yoy decline of 30.0%) against our expectation of Rs.26,000cr, taking the order inflow for FY2012 to Rs.70,574cr, implying a yoy decline of 12.0%.
For FY2013, management has given a guidance of 15-20% growth for both revenue and order inflow. We believe that although the company can achieve this guidance on the revenue front, given its robust order backlog, it would be difficult to achieve 15-20% growth on the order inflow front, considering the challenging macro environment.
We believe L&T is best placed to benefit from the gradual recovery in capex cycle, given its diverse exposure to sectors, strong balance sheet and cash flow generation as compared to peers. We maintain L&T as our top pick in the sector and maintain our Buy rating on the stock with a target price of Rs.1,641.
JSW Steel (CMP: Rs.620 / TP: - / Upside: -)
JSW Steel reported better-than-expected standalone results for 4QFY2012 on account of higher-than-expected sales volumes. The company's net sales grew by 35.3% yoy to Rs.9,511cr (above our estimate of Rs.8,406cr). Net sales growth was driven by increased steel volumes (+33.3% yoy to 2.3mn tonnes) and realization (+6.0% yoy to Rs.43,003/tonne). Although JSW Steel’s net sales grew by 35.3% yoy, its EBITDA decreased by 0.1% yoy to Rs.1,652cr and EBITDA margin slipped by 616bp yoy to 17.4% on account of higher raw-material prices. The company reported exceptional item related to forex gain of Rs.199cr during the quarter. Interest expenses grew by 140.7% yoy to Rs.368cr. Hence, adjusted net profit decreased by 33.6% yoy to Rs.553cr (higher than our estimate of Rs.432cr). Reported PAT declined by 9.7% yoy to Rs.752cr. On a consolidated basis, the company reported net sales of Rs.10,153cr (+40.8% yoy), EBITDA of Rs.1,887cr (+13.6% yoy) and adjusted PAT of Rs.480cr (-39.6% yoy). The company expects to produce 8.5mn tonnes of steel during FY2013. We keep our rating and target price under review.
Ashok Leyland (CMP: Rs.26 / TP: Under Review / Upside: -)
Ashok Leyland (AL) reported in-line results for 4QFY2012. The company’s net sales registered healthy 12% yoy growth to Rs.4,311cr, led by strong volume growth of 20% yoy. Volume performance was boosted by the newly launched LCV Dost, which accounted for ~14% of total sales during the quarter. While volumes in the MHCV goods segment declined by 3% yoy, MHCV passenger volumes jumped by 26% yoy. Net average realization, however, witnessed a decline of ~8% yoy, largely on account of higher contribution from the lower priced Dost vehicle. EBITDA margin declined by 230bp yoy to 10.9% on account of lower-margin product Dost and due to a 47% yoy increase in other expenditure, which could be due to increased advertising spends. As a result, operating profit declined by 7.5% yoy to Rs.470cr. Net profit declined by 13.2% yoy to Rs.259cr, which was in-line with our expectation. Higher interest (up 32% yoy) and depreciation expense (up 24% yoy) also impacted the company’s bottom-line performance. We maintain our Buy rating on the stock; however, our target price is under review. We shall release a detailed result note post the earnings conference call with the management.
Abbott India (CMP: Rs.1,505 / TP: Rs.1,628 / Upside: 8.1%)
For 1QCY2012, Abbott India reported a muted set of numbers. The company's top line was marginally lower by 2.7% qoq, from Rs.386cr to Rs.376cr. Numbers are not comparable to 1QCY2011, as the company’s results were merged with that of Solvay Pharma in August 2011. The company's EBITDA margin contracted by 648bp qoq in 1QCY2012, mainly due to increased employee expenses and other expenses. Depreciation for the quarter increased by 25% qoq, while tax rate stood at 41.9%, thus leading to muted PAT. The company made provisions of Rs.18.69cr for change in its accounting for sales return and change its depreciation method to straight line method from written-down methods, resulting in write back of depreciation of Rs.29.08cr. This led to net profit of Rs.27.08cr, a 26.6% decline on a qoq basis. We expect the company to post better revenue going forward on the back of improved product portfolio and synergies to reduce costs going forward. Also, change in depreciation method will add to the bottom line. We recommend Accumulate on the stock with a revised target price of Rs.1,628, based on a target PE of 18x for CY2013.
Monnet Ispat & Energy (CMP: Rs.457 / TP: - / Upside: -)
Monnet Ispat reported a robust set of numbers for 4QFY2012. The company's net sales grew by 20.7% yoy to Rs.536cr mainly due to increased realizations. However, raw-material cost as a percentage of sales increased to 59.8% in 4QFY2012 compared to 55.7% in 4QFY2011. Hence, EBITDA increased only by 10.4% yoy to Rs.138cr, while EBITDA margin contracted by 34bp yoy to 25.7%. Interest expenses increased by 28.8% yoy to Rs.24cr, while other income increased by 20.0% yoy to Rs.12cr. Consequently, net profit grew by 13.6% yoy to Rs.83cr.
The company plans a capex of Rs.1,500cr for its upcoming power plants and Rs.800cr for steel capacity expansion during FY2013. The company reported that the implementation of 1,050MW power plant at Angul is on track, and it is expected to be operational in 2HFY2014.
We maintain our Buy recommendation on the stock; our target price is under review.
IVRCL (CMP: Rs.45 / TP: - / Upside: -)
IVRCL reported a disappointing set of numbers for 4QFY2012, with lower-thanexpected performance on all fronts. The company’s revenue declined by 22.1% yoy to Rs.1,598cr, below our estimate of Rs.1,682cr. On the operating margin front, the company posted dismal margin of 6.4%, reporting a dip of 230bp yoy, below our estimate of 8.0%. Interest cost came in at Rs.66.1cr, which was flat on a yoy as well as qoq basis. On the earnings front, IVRCL reported a 92.3% decline yoy to Rs.5cr, against our estimate of a 56.6% decline. This was on account of poor performance on the revenue as well as margin front. Post the conference call, we would come out with a detailed note. Currently, the target price and rating are under review.
Orchid Chemicals (CMP: Rs.161 / TP: Under review / Upside: -)
Orchid Chemicals reported sales and the net profit came in below expectations. For the quarter, the company posted sales of Rs.485cr, a dip of 8.1% yoy. On the operating front, the operating profits also dipped by 8.0%, almost stagnant at last year levels. For the full year the company has posted Rs.1839cr, registering a growth of 7.0% yoy, while the net profit came in at Rs.17.5cr. The full year OPM’s came in at 17.5%. For FY2013, the company has guided towards a 10-15% yoy growth on the topline. Currently the stock is under review.
Madhucon Projects (CMP: Rs.46 / TP: - / Upside: -)
For 4QFY2012, Madhucon Projects (MPL) reported a mixed set of numbers with revenue coming below our expectations; however, higher EBITDAM and other income resulted in better-than-expected earnings performance. On the top-line front, MPL posted a disappointing performance, with a yoy/qoq decline of 27.1%/30.8% to Rs.432cr, way below our expectation of Rs.659cr. EBITDAM came in at 11.8%, posting a jump of 120bp/340bp on a yoy/qoq basis against our expectation of 9.2%. Interest cost stood at Rs.27cr, registering a jump of 9.5% on a yoy basis, but down by 9.8% on a sequential basis. On the earnings front, the company posted a decline of 22.5% on a yoy basis at Rs.15cr, in-line with our expectation of Rs.14cr despite a higher tax rate (38.2%) on the back of higher EBITDAM and other income (Rs.14cr). We maintain our Buy view on the stock however the target price is under review.

Result Previews
JK Lakshmi Cement
JK Lakshmi Cement (JKLC) is set to declare its 4QFY2012 results. For the quarter, we expect JKLC to post 5.9% yoy growth in its top line to Rs.439cr, driven by volume growth and higher realization. The company’s OPM is expected to increase by 87bp yoy to 19.4%. The bottom line is expected to register growth of 36% yoy to Rs.43.4cr. We maintain our Buy view on the stock with a target price of Rs.79.
Dishman
For the 4QFY2012, Dishman is expected to post top-line growth of 11.3% yoy to Rs.383cr.The company is expected to post EBITDA of 17.8%, up 170bps yoy. On the net profit front, the company is expected to post net profit of Rs.28.5cr, registering 24.0% yoy growth. We maintain our buy with a target price of Rs.92.

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