Disappointing H1 FY10 results
Suzlon’s consolidated 1H FY10 revenue was INR89bn, down 11% y-y. Suzlon Wind only delivered 406MW of wind turbines in 1H FY10. Suzlon consequently lowered FY10 shipment guidance to 1,900-2,100MW from 2,400-2,600MW.
Over the past few months, some positive policy developments have taken place in Suzlon’s key markets: US, India, China and Australia. While we do not expect these to translate into real business momentum in the near term, we are more positive about our current assumption of a 32% y-y shipment growth (2,500MW) in FY11.
Suzlon’s net debt to equity ratio reached 160% by September 2009. Suzlon continues to work towards de-leveraging the balance sheet and reducing absolute debt levels through the planned sale of Hansen, refinancing its current debt and fund infusion from promoters. Based on our downward earnings revision, we believe Suzlon runs a risk of not meeting its debt covenants, but management noted that the penalty may only result in slight increase in interest rates.
We expect share price weakness due to poor 1H FY10 results, reduced guidance and risks on order intake. However, we are positive about Suzlon’s long-term potential given our bullish view on the wind power industry.
Investors may avoid this scrip till the management comes out with a clear picture. However, the traders can still look for the technicals to make gain from short term price movements.
Tuesday, November 10, 2009
Lakshmi Energy: Result Highlights
Sales are lower primarily due to lower offtake in the agri business. The sales in the agri business fell by 39% YoY while the energy business witnessed strong sales with an increase of Rs. 31.6Cr YoY.
Operating income fell by 2% YoY during the quarter mainly benefiting from lower material costs, which fell by 57% YoY. Operating income was also boosted by lower other expenditure which fell by 40% YoY.
In spite of lower sales and operating income, net profit for the company increased by 19% YoY. The jump came on the back of lower depreciation costs and lower tax expense for the year. Depreciation costs were lower by 49% YoY while tax expenses fell by 23% YoY.
While on a year to year basis, the top-line performance has been bad mainly due to the lower offtake, improvement is seen on a sequential basis. Further, the power segment continues to aid the margin growth.
We suggest holding this stock for another one year for better return.
Operating income fell by 2% YoY during the quarter mainly benefiting from lower material costs, which fell by 57% YoY. Operating income was also boosted by lower other expenditure which fell by 40% YoY.
In spite of lower sales and operating income, net profit for the company increased by 19% YoY. The jump came on the back of lower depreciation costs and lower tax expense for the year. Depreciation costs were lower by 49% YoY while tax expenses fell by 23% YoY.
While on a year to year basis, the top-line performance has been bad mainly due to the lower offtake, improvement is seen on a sequential basis. Further, the power segment continues to aid the margin growth.
We suggest holding this stock for another one year for better return.
Elecon Engg. – Q2FY10 Update
Elecon’s revenues grew by 1.1% YoY during 2QFY10. The company was able to manage this growth largely due to a strong growth in its material handling equipment (MHE) business (which recorded a 16% YoY growth during the year). On the other hand, its transmission equipment (TE) business saw a fall of almost 18% YoY. As such, the MHE business increased its share in the company’s total revenue to nearly 64% from 56% last year, while the TE business contributed to the balance 36% (44% in 2QFY09).
Elecon’s operating margins contracted by 1.2% YoY during 2QFY10. The reason behind this was higher raw martial costs (both as percentage of sales). On the other hand, employee costs and other expenditure saw a fall as a percentage of sales during the quarter.
Net profits (33% YoY decline) saw a substantial fall due to a to three factors, namely, the fall in operating margins, higher interest costs, and much higher depreciation expenses.
At the current price of Rs 81, the stock is trading at a multiple of 15.4 times its trailing twelve months earnings, this restricts major upward movement short term.
Elecon’s operating margins contracted by 1.2% YoY during 2QFY10. The reason behind this was higher raw martial costs (both as percentage of sales). On the other hand, employee costs and other expenditure saw a fall as a percentage of sales during the quarter.
Net profits (33% YoY decline) saw a substantial fall due to a to three factors, namely, the fall in operating margins, higher interest costs, and much higher depreciation expenses.
At the current price of Rs 81, the stock is trading at a multiple of 15.4 times its trailing twelve months earnings, this restricts major upward movement short term.
Thursday, November 5, 2009
Cairn India – Buy on Dips
How it performed past quarter:
Cairn India’s (CIL) top line at Rs. 2,29.8 Cr, was down 28.2% Y-o-Y (on lower crude prices and production) and up 12.1% Q-o-Q (on higher crude prices) in Q2FY10.
The company’s net hydrocarbon production (includes Rajasthan production, revenues on which were not booked), at 18,638 boepd, increased 8.9% Y-o-Y and 17.1% Q-o-Q.
Crude realisation of USD 69.1/bbl was up 14.8% Q-o-Q, down 40.6% Y-o-Y, and gas realisation was lower at USD 3.9/mmscf.
Higher total expenses (production and employee) resulted in an EBITDA of Rs. 1,33.3Cr. (down 41.5% Y-o-Y and up 0.9% Q-o-Q).
CIL’s results benefited from several exceptional items like foreign exchange fluctuation gain of Rs. 66.18 Cr. (included in other income), reversal of deferred tax liability of Rs. 264.79 Cr.(considering field like as stipulated in PSC against useful economic life), and gain of Rs.163.71 Cr. on reversal of provision in the ONGC carry case (group has won its appeal in Malaysian Court). Hence, CIL’s PAT, at Rs. 469.5 Cr, increased 60.1% Y-o-Y and was almost 10x Q-o-Q.
Outlook
Crude production at the Mangala field commenced on August 20, 2009, In line with its guidance during the 2006 IPO.. Train 1 was commissioned and production has begun. First cargo of crude was delivered to MRPL on October 9, 2009. Train 2 (50 kbpd capacity) completion will be delayed from end CY09 to early CY10 and train 3 (50 kbpd capacity) by H1CY10. With this, Mangala plateau production of 125,000 bpd is targeted by H1CY10. GoI has agreed for CIL to be able to sell to private refiners. Further, management also indicated little impediment to exports. Aishwarya FDP has yet to be approved. CIL estimates the implied price realisation is ~10-15% discount to brent (based on six month ending Sept 2009 average prices).
In addition to the ramp-up of Rajasthan production, the company has 25 discoveries, development of which could positively impact production.
One may look at buying this scrip on dips and hold on as long as you can, for maximising your profit.
By and large the movement will be decided by the oil prices, which is unlikely to come down any time soon.
Cairn India’s (CIL) top line at Rs. 2,29.8 Cr, was down 28.2% Y-o-Y (on lower crude prices and production) and up 12.1% Q-o-Q (on higher crude prices) in Q2FY10.
The company’s net hydrocarbon production (includes Rajasthan production, revenues on which were not booked), at 18,638 boepd, increased 8.9% Y-o-Y and 17.1% Q-o-Q.
Crude realisation of USD 69.1/bbl was up 14.8% Q-o-Q, down 40.6% Y-o-Y, and gas realisation was lower at USD 3.9/mmscf.
Higher total expenses (production and employee) resulted in an EBITDA of Rs. 1,33.3Cr. (down 41.5% Y-o-Y and up 0.9% Q-o-Q).
CIL’s results benefited from several exceptional items like foreign exchange fluctuation gain of Rs. 66.18 Cr. (included in other income), reversal of deferred tax liability of Rs. 264.79 Cr.(considering field like as stipulated in PSC against useful economic life), and gain of Rs.163.71 Cr. on reversal of provision in the ONGC carry case (group has won its appeal in Malaysian Court). Hence, CIL’s PAT, at Rs. 469.5 Cr, increased 60.1% Y-o-Y and was almost 10x Q-o-Q.
Outlook
Crude production at the Mangala field commenced on August 20, 2009, In line with its guidance during the 2006 IPO.. Train 1 was commissioned and production has begun. First cargo of crude was delivered to MRPL on October 9, 2009. Train 2 (50 kbpd capacity) completion will be delayed from end CY09 to early CY10 and train 3 (50 kbpd capacity) by H1CY10. With this, Mangala plateau production of 125,000 bpd is targeted by H1CY10. GoI has agreed for CIL to be able to sell to private refiners. Further, management also indicated little impediment to exports. Aishwarya FDP has yet to be approved. CIL estimates the implied price realisation is ~10-15% discount to brent (based on six month ending Sept 2009 average prices).
In addition to the ramp-up of Rajasthan production, the company has 25 discoveries, development of which could positively impact production.
One may look at buying this scrip on dips and hold on as long as you can, for maximising your profit.
By and large the movement will be decided by the oil prices, which is unlikely to come down any time soon.
Monday, November 2, 2009
Fortis Healthcare – Healthy Days Waiting
Fortis Healthcare Limited declared its Q2 results. The company’s Q2 net profit was up at Rs 12.97 crore versus Rs 4.3 crore. Its revenues were up at Rs 187.5 crore versus Rs 154.7 crore.
H1F10 revenue increased to Rs. 370.36 Cr. from Rs. 291.53Cr and net profit up to Rs. 20.52Cr as against Rs. 10.99 Cr.
Quarterly EPS stands at Rs. 0.57 as against Rs. 0.17 during Q2FY09.
Outlook
The company is in growth stage. 2 months ago, Fortis Healthcare sealed the biggest deal in the Indian healthcare industry when it acquired 10 hospitals from Wockhardt for Rs 910 crore helping it emerge as a pan-India player. The acquisition adds 1902 beds to its existing 3142 beds and expands its geographical presence to Mumbai, Bangalore and Kolkata.
Sensing the huge growth potential in the Indian healthcare industry, the company has been keen to scale up rapidly and acquisitions has been its preferred route for growth. After the controversial takeover of the Escorts group’s healthcare business in 2005, it snapped up Chennai-based Malar Hospital and Delhi-based, The Cradle, in 2007. With these acquisitions, the company seems well on its way to achieve its target of having around 40 hospitals, or approximately 6,000 beds, by 2012.
The company’s greenfield hospitals in Shalimar Bagh, Delhi and Gurgaon project are on track to be operational by end FY10 & FY11 respectively.
The management is very vibrant, and is capable of making the company to a largest hospital network in India. However, the negative about them is the way they get off from Ranbaxy, which is still alive in the minds of investors.
One, with long term view of 2 -3 years, can buy this stock and grow your money with the company.
H1F10 revenue increased to Rs. 370.36 Cr. from Rs. 291.53Cr and net profit up to Rs. 20.52Cr as against Rs. 10.99 Cr.
Quarterly EPS stands at Rs. 0.57 as against Rs. 0.17 during Q2FY09.
Outlook
The company is in growth stage. 2 months ago, Fortis Healthcare sealed the biggest deal in the Indian healthcare industry when it acquired 10 hospitals from Wockhardt for Rs 910 crore helping it emerge as a pan-India player. The acquisition adds 1902 beds to its existing 3142 beds and expands its geographical presence to Mumbai, Bangalore and Kolkata.
Sensing the huge growth potential in the Indian healthcare industry, the company has been keen to scale up rapidly and acquisitions has been its preferred route for growth. After the controversial takeover of the Escorts group’s healthcare business in 2005, it snapped up Chennai-based Malar Hospital and Delhi-based, The Cradle, in 2007. With these acquisitions, the company seems well on its way to achieve its target of having around 40 hospitals, or approximately 6,000 beds, by 2012.
The company’s greenfield hospitals in Shalimar Bagh, Delhi and Gurgaon project are on track to be operational by end FY10 & FY11 respectively.
The management is very vibrant, and is capable of making the company to a largest hospital network in India. However, the negative about them is the way they get off from Ranbaxy, which is still alive in the minds of investors.
One, with long term view of 2 -3 years, can buy this stock and grow your money with the company.
Sintex Industries: Q2F10 Result Review
Sintex Industries came out with a result, which was below market expectation. Let us go through the figures once again.
Revenue
Total revenue fell by 2.5% on quarterly basis and on half yearly basis H1 revenue fell by 5.8%, YoY. According to the company, the revenue fall was mainly due to reduction in prices for their products, line with reduced commodity prices.
Segment wise, textile division dragged down overall revenue, declined 14.1% for the quarter and 11.4% for the half year. This was largely attributable to the falling polymer prices and most of which had been passed on the customer.
Other hit was on operating income, which was down 70.6% during last quarter. A slag in the BT shelters segment and the US subsidiary facing execution hiccups in the wind energy segment saw the other income dropping significantly 78%.
From the companies recently acquired subsidiaries, Zeppelin Mobile performed the best (sales increased 136.2%) and Wausaukee Composites (sales decreased 33.6%) performed the worst.
Operating Profit Margin
Operating profit margin down 1.8% during Q1F10, stands at 18.2%, backed by better profit margins from Prefabs (24%) and monolithic (26%) segments. Again, textiles was on blip side owing to under utilization of recent capacity additions, OPM felled to just 4%.
Net Profit
Q2 net profit dropped to Rs. 58.26Cr. from 83.78Cr, i.e. 31.7%, on YoY basis. H1 net profit down by 16%.
Earning Per Share
Q2 EPS stands at Rs. 4.2 down 31.7% from Rs. 6.2 during Q2 previous year. On half yearly wise, EPS down to Rs. 8.7 from Rs.10.4, a fall of 16%.
Outlook
The management expects a topline growth of 10% and PAT growth of 15% for FY10. However, It is alarming the management’s cautious tone on the BT shelter segment and its overseas subsidiaries performance.
Going ahead, we expect the companies prime focus would be on the building materials segment, anticipating better order inflows from national development programs line JNNURM, Bharat Nirman etc. With govt. push for mass housing and better infrastructure would be the key for the companies domestic business.
We expect, with the smooth order inflow expected from the government in the mass housing segment and a strong order book position (now at Rs. 1400 Cr) would enable the company to sustain its growth momentum. Moreover, revival in the overseas subsidiaries’ performances would add sheen to its business going forward.
We maintain our buy recommendation, for a holding of 12 – 16 months.
Revenue
Total revenue fell by 2.5% on quarterly basis and on half yearly basis H1 revenue fell by 5.8%, YoY. According to the company, the revenue fall was mainly due to reduction in prices for their products, line with reduced commodity prices.
Segment wise, textile division dragged down overall revenue, declined 14.1% for the quarter and 11.4% for the half year. This was largely attributable to the falling polymer prices and most of which had been passed on the customer.
Other hit was on operating income, which was down 70.6% during last quarter. A slag in the BT shelters segment and the US subsidiary facing execution hiccups in the wind energy segment saw the other income dropping significantly 78%.
From the companies recently acquired subsidiaries, Zeppelin Mobile performed the best (sales increased 136.2%) and Wausaukee Composites (sales decreased 33.6%) performed the worst.
Operating Profit Margin
Operating profit margin down 1.8% during Q1F10, stands at 18.2%, backed by better profit margins from Prefabs (24%) and monolithic (26%) segments. Again, textiles was on blip side owing to under utilization of recent capacity additions, OPM felled to just 4%.
Net Profit
Q2 net profit dropped to Rs. 58.26Cr. from 83.78Cr, i.e. 31.7%, on YoY basis. H1 net profit down by 16%.
Earning Per Share
Q2 EPS stands at Rs. 4.2 down 31.7% from Rs. 6.2 during Q2 previous year. On half yearly wise, EPS down to Rs. 8.7 from Rs.10.4, a fall of 16%.
Outlook
The management expects a topline growth of 10% and PAT growth of 15% for FY10. However, It is alarming the management’s cautious tone on the BT shelter segment and its overseas subsidiaries performance.
Going ahead, we expect the companies prime focus would be on the building materials segment, anticipating better order inflows from national development programs line JNNURM, Bharat Nirman etc. With govt. push for mass housing and better infrastructure would be the key for the companies domestic business.
We expect, with the smooth order inflow expected from the government in the mass housing segment and a strong order book position (now at Rs. 1400 Cr) would enable the company to sustain its growth momentum. Moreover, revival in the overseas subsidiaries’ performances would add sheen to its business going forward.
We maintain our buy recommendation, for a holding of 12 – 16 months.
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