india equity analytics today: buy stock of britannia industries with target price rs 1065
DESCRIPTION
Britannia Industries volume growth will recover gradually over the next few quarters, driven by higher brand spends and portfolio expansion. Narnolia Securities Limited have "BUY" view on the stock with a target price of Rs 1065TRANSCRIPT
Britannia Inds :"Decent quarter" "BUY" 19th Feb 2014
Once again, Britannia Industries revealed better earning performance than street expectation. Its consolidated revenue grew by 10.7% (YoY) led
by 4-5% volume growth during the quarter.The company's margins are also likely to expand due to higher proportion of premium products and
easing input costs. We have "BUY" view on the stock with a target price of Rs 1065. At a CMP of Rs915, stock trades at 9.3x FY15E P/BV.
................................................. ( Page : 2-4)
19th Feb, 2014
Edition : 209
IEA-Equity
Strategy
CIPLA : "BUY" 14th Feb 2014
eClerx Services :"Consistent Performer" "BUY" 18th Feb 2014
SUNPHARMA :Robust Performance "NEUTRAL" 17th Feb 2014
Sun Pharmaceuticals Industries limited posted 3QFY14 results above street expectations with total revenues including other operating income
at Rs 4312 Cr up 50.5 % YoY led by robust growth in US formulations and Taro business. The stellar performance of company was supported
well from domestic operations. The US formulation business grew by more 56 % YoY to USD 434 Mn
.................................................................................................. ( Page : 13-14)
State Bank of India : "BUY"
eClerx Services witnessed inline set of growth with 2.3 %(QoQ) sales growth in INR term and 4.7%(QoQ) in USD term (4% in CC term) led by
some preponement of volume of work from Q4 into Q3 which has resulted into the slightly higher sequential growth. Company’s high RoE and
dividend payout ratio make attractive to invest on the stock. ........................................................ ( Page : 5-7)
Coal India LTD : "BUY" 14th Feb 2014
Earlier we suggested, if earnings falls, then price might go beyond 256, but p/b level may be maintained , else we assume that since the
company is a good dividend paying company with Roe above 30% we assume p/b should remain above 3. We see Coal India at a attractive
valuation to go long from the current dips. So we stick to our previous estimates and recommend Maintain Buy CIL at price dips with a target
price of Rs.307/-. ............................................................... ( Page : 19- 21)
Cipla Limited posted its 3QFY14 results with its standalone net revenues at Rs 2282 up 10 % YoY led by healthy growth in export business with
well support from India operations to. The revenues from export business including formulations and API grew by 36 % to 1509 Cr for the
quarter while domestic business grew by 9% YoY to 1044 Cr. ................................................ ( Page : 15-16)
Somany Ceremics: "Outlook Challenging in near term" "REDUCE" 14th Feb 2014
At the current CMP of Rs. 131, the stock is trading at a PE of 15.1x and 11.0x of FY14E and FY15E. The company can post RoE of 17.0% and 17.1%
& EPS of Rs. 8.7 and Rs. 10.8 FY14E and FY15E. We are downgrading the rating to "Reduce" and advise investors to book profits at current level.
Over the longer term, we expect the efforts to introduce new ventures, curtail costs and the expected economic revival driven by an uptick in
demand in the latter part of FY2015, to boost its fortunes. In the interim period, we are reducing our target multiple to 10x of FY15E and price
target to Rs 115. ............................................................ ( Page : 17-18 )
17th Feb 2014
SBIN’s profitability was declined by 34% YoY largely due to higher provisions and contingencies led by deterioration in asset quality and higher
tax in order to create DTL special reserve as per suggestion by RBI. Bank’s NII grew by 13.3% YoY led by higher loan growth and stable NIM.
Asset quality slightly deteriorated with GNPA stood at 5.9% versus 5.8% in previous quarter and net NPA further worsen to 3.2% against 2.9%
sequentially due to lower loan loss provisions made. We value bank at Rs.1779/share which is 1.1 times of FY14E book value.
.............................................................................................. ( Page : 8-12)
Narnolia Securities Ltd,
India Equity AnalyticsDaily Fundamental Report on Indian Equities
Britannia Inds
1M 1yr YTD
Absolute 1.7 86.9 34.57
Rel. to Nifty 3.8 82.8 18.27
Current 2QFY14 1QFY14
Promoters 50.75 50.8 50.85
FII 20.11 19.11 19.48
DII 8.77 9.59 9.89
Others 20.38 20.5 19.78
Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 1771.94 1755.27 0.9 1620.4 9.4
EBITDA 159.7 160.4 (0.4) 103.5 54.3
PAT 99.8 97.1 2.8 62 61.0
EBITDA Margin 9.0% 9.1% (10bps) 6.4% 260bps
PAT Margin 5.6% 5.5% 10bps 3.8% 180bps
2
BRITANNIA
Share Holding Pattern-%
Nifty
Healthy distribution reach: The Company is also taking initiative to increase its rural
distribution reach for benefitting the opportunity of increasing consumption of food
products in rural markets. The company plans to increase its overall distribution
coverage by around 7-8% every year and rural coverage by around 10% every year.
Margin Pickup: EBITDA Margin improved by 250 bps to 8.9%. The operating profit has
increased by 54% mainly due to decline in raw material cost by 420 bps to 54.7% and
purchase of stock in trade by 100 bps to 7.3% of adjusted net sales. The company also
expects to track margin expansion ahead by judicious mix of cost rationalization and
increasing supply chain efficiency.
Once again, Britannia Industries revealed better earning performance than street
expectation. Its consolidated revenue grew by 10.7% (YoY) led by 4-5% volume growth
during the quarter. Even, company has hiked the prices of some of its brands during
the quarter. PAT grew by 61% (YoY) because of its effective cost rationalization efforts.
The management expects the biscuit business to grow by 10-11% in FY14E, whereas
the non-biscuit business to grow at a faster rate by 20-25% in FY14E. Over the last few
quarter, company has more focused on its product portfolio expansion. We expect
that new products expansion is likely to increase going forward. By judicious mix of
cost rationalization and high value added biscuits, we expect its margin expansion
gradually over next couple of quarters.
No pressure on RM cost: High food price inflation remains a concern for the company.
Thankfully, Britannia doesn’t import much raw materials from abroad and is thus not
affected by rupee fluctuations. Its strategy of focusing on premium brands has not only
allowed the company to hike prices but also improve its product mix as well.
Market DataBSE Code 500825
NSE Symbol
52wk Range H/L 973/478
10967
Average Daily Volume 248428
Pricing and Promotion: During the quarter, company initiated its price hike of some of
its brand. The full benefit of these prices hikes will be seen in the March quarter. Its
strategy of focusing on premium brands has not only allowed the company to hike prices
but also improve its product mix as well.
Previous Target Price -
Upside 16%
Change from Previous -
"Decent quarter"
CMP 915
Target Price 1065
Consistency on witnessing better numbers with Margin expansion:Result update BUY
6127
Mkt Capital (Rs Crores)
Stock Performance
1 year forward P/BV
Rs, Crore
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
View and Valuation: Management also believes that volume growth will recover
gradually over the next few quarters, driven by higher brand spends and portfolio
expansion. The company's margins are also likely to expand due to higher proportion of
premium products and easing input costs. We have "BUY" on the stock with a target
price of Rs 1065. At a CMP of Rs915, stock trades at 9.3x FY15E P/BV.
"BUY"19th Feb' 14
Narnolia Securities Ltd,
3
The company's margins are also likely to
expand due to higher proportion of
premium products and easing input costs.
(Source: Company/Eastwind)
Expenses on Sales-%
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
Sale of Land in Chennai and Banglore could result in Value unlocking: The company
plans to sell off its 8.60 acres industrial land in Chennai,which is located at Madras
Thiruvallur High (MTH) Road, Padi, Chennai. We expect the company to realize around
Rs120 crores to Rs150 crores from this land sale when it happens. Further the company
has another 5.0 acres prime real estate land in Bangalore at old airport road which can
fetch around Rs 350 crores.
volatility on key input (wheat, sugar, palm
oil) would prices directly impact its
margin picture,
Britannia Inds.
Sales and Sales growth-%(YoY)
Entry into new categories like cereals will
also help drive growth. Consequently, the
company's earnings are expected to grow
20% over the next 2 years.
(Source: Company/Eastwind)
Margin-%
Narnolia Securities Ltd,
4
Please refer to the Disclaimers at the end of this Report.
Britannia Inds.
Financials
(Source: Company/Eastwind)
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
Net Sales 3770.84 4589.73 5460.75 6135.91 6869.15 7693.45
Other Operating Income 63.53 19.65 24.62 49.5 68.69 76.93
Total income from operations (net) 3834.37 4609.38 5485.37 6185.41 6937.84 7770.38
Raw Materials Cost 2416.78 2714.38 3109.12 3350.51 3722.15 4196.01
Purchases of stock-in-trade 0 328.91 437.68 518.51 520.34 543.93
WIP 0 -15.68 -14.03 -7.57 -76.32 -77.70
Employee Cost 157.9 177.49 211.15 226.75 270.58 310.82
Advertisement and Publicity 300.96 332.84 419.6 534.28 610.53 660.48
Other expenses 728.57 834.76 1010.98 1142.39 1255.75 1398.67
Total expenses 3604.21 4372.7 5174.5 5764.87 6303.03 7032.20
EBITDA 230.16 236.68 310.87 420.54 634.81 738.19
Depreciation 58.23 64.91 61.83 73.15 84.12 100.50
Other Income 0 59.01 59.14 52.24 27.75 38.85
EBIT 171.93 230.78 308.18 399.63 578.44 676.54
Interest Cost 23.46 43.63 41.6 41.3 8.88 4.10
Profit (+)/Loss (-) Before Taxes 148.47 187.15 266.58 358.33 569.57 672.45
Provision for Taxes 5.58 52.94 66.85 98.55 176.57 208.46
Net Profit (+)/Loss (-) 142.89 134.21 199.73 259.78 393.00 463.99
Sales 10.2% 21.7% 19.0% 12.4% 12.0% 12.0%
EBITDA -16.8% 2.8% 31.3% 35.3% 51.0% 16.3%
PAT -0.3% -6.1% 48.8% 30.1% 51.3% 18.1%
RM Cost 63.0% 58.9% 56.7% 54.2% 53.7% 54.0%
Ad Spend 8.0% 7.3% 7.7% 8.7% 8.9% 8.6%
Employee Cost 4.1% 3.9% 3.8% 3.7% 3.9% 4.0%
Other expenses 19.3% 18.2% 18.5% 18.6% 18.3% 18.2%
Tax rate 3.8% 28.3% 25.1% 27.5% 31.0% 31.0%
EBITDA 6.0% 5.1% 5.7% 6.8% 9.2% 9.5%
EBIT 4.5% 5.0% 5.6% 6.5% 8.3% 8.7%
PAT 3.7% 2.9% 3.6% 4.2% 5.7% 6.0%
CMP 1599.5 382.6 459.9 504.7 915.0 915.0
No of Share 2.39 11.95 11.95 11.95258 11.97 11.97
NW 282.8 326.04 409.17 555.58 829.55 1174.50
EPS 59.79 11.23 16.71 21.73 32.83 38.76
BVPS 118.33 27.28 34.24 46.48 69.30 98.12
RoE-% 50.5% 41.2% 48.8% 46.8% 47.4% 39.5%
Dividend payout-% 126.4% 51.8% 45.1% 45.5% 30.3% 25.7%
P/BV 13.5 14.0 13.4 10.9 13.2 9.3
P/E 26.8 34.1 27.5 23.2 27.9 23.6
Growth-% (YoY)
Valuation:
Margin-%
Expenses on Sales-%
eClerx Services
1M 1yr YTD
Absolute 20.4 26.3 30.6
Rel. to Nifty 14.6 20.5 16.3
Current 2QFY14 1QFY14
Promoters 52.95 52.88 53.13
FII 26.21 22.37 21.38
DII 11.27 14.72 14.80
Others 9.57 10.03 10.69
Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 219.5 214.6 2.3 170.8 28.5
EBITDA 88.81 92.8 (4.3) 66.8 32.9
PAT 62.33 67.91 (8.2) 49 27.2
EBITDA Margin 40.5% 43.2% (270bps) 39.1% 140bps
PAT Margin 28.4% 31.6% (320bps) 28.7% (30bps)
5
52wk Range H/L 1255/599
"Consistent Performer"
CMP 1212
Target Price 1074
Result update Inline numbers , and expects to report better than NASSCOM guidance(FY14E);
eClerx Services witnessed inline set of growth with 2.3 %(QoQ) sales growth in INR
term and 4.7%(QoQ) in USD term (4% in CC term) led by some preponement of volume
of work from Q4 into Q3 which has resulted into the slightly higher sequential growth .
It expects some impact of this on Q4 growth. While, PAT decline by 7.2%, sequentially.Change from Previous 22%
Buy
Previous Target Price 881
Upside -11%
Mkt Capital (Rs Crores) 3701
Stock Performance
1 year forward P/E
Rs, Crore
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
Share Holding Pattern-%
Average Daily Volume 18894
View and Valuation: We expect that company’s organic revenue growth remains soft in
near term, and company is very focussed on inorganic growth and expect to see growth
from cable business . Furthermore, stable billing rate will support to maintain margin.
Company’s high RoE and dividend payout ratio make attractive to invest on the stock.
At a CMP of Rs 1212, stock trades at 12.5x FY15E earnings, we recommend ”BUY”
view on the stock with a target price of Rs 1410 (revised from Rs 1350) .
On demand environment, it indicated that there is no significant change and expects
to grow same pace of 10-15% in USD terms in the medium term. On margins, it
indicated that it will continue to operate in the mid 30% going forward. It continues to
look at inorganic opportunities.
Margin declined and expects to maintain stablity on demand: The OPM fell by 310 bps
QoQ to 37% on the back of rise in Selling and Distribution costs due to increase in onsite
headcount, bonus and commission and travel. Accordingly, PAT margin down by 270bps
to 28.6%, sequentially. Management is very confident to maintain its PAT margin at 30-
31% in near term.
Good growth from Financial Services: The Cable business grew faster on the low base,
Financial Services also grew fast during the quarter. In the Cable business, there is lot of
demand for its services. The digital and digital market has lot of demand and is another
key area.
Growth from Emerging revenue: It added 2 clients during the quarter. The Revenue
growth from Top 5 grew by 8% YoY and Emerging grew by 35% QoQ respectively during
the quarter. The Emerging revenue has continued to outpace growth in strategic clients
in line with firm strategy.
Approval on SEZ: The SEZ approval received for new floor in Airoli and planned go live
on April 2014 (600 Seats). It is discussing additional floors in Airoli to consolidate
Mumbai facilities, subject to regulatory approval. During the quarter, the Final payment
is done for Agilyst acquisition (for the total acquisition cost ~ $21 million) during the
quarter.
Nifty 6048
Market DataBSE Code 532755
NSE Symbol ECLERX
"BUY"18th Feb' 14
Narnolia Securities Ltd,
(1) The billing rates expected to be flat to slight uptick for the FY15E.
(2) Expect to see similar set of environment in FY 15E than FY14.
(4) Tax rate is expected to see at 23% mark in FY15E.
(5) It continues to look at inorganic opportunities.
(6) Expects to maintain 51% of payout ratio.
6
(Source: Company/Eastwind)
eClerx Services.
Sales (USD) and Sales growth-%(QoQ)
On $term, Sales growth was up by 4.7%
(QoQ) and 2.3% on INR term,
Please refer to the Disclaimers at the end of this Report.
(3) On margins, it indicated that it will continue to operate in the mid 30% (30-31%) going
forward.
Key Facts from Cnference Call
Margin-%
(Source: Company/Eastwind)
Employee Metrics-%
Attrition decreased from 36% (2QFY14) to
31.8% .
(Source: Company/Eastwind)
Narnolia Securities Ltd,
7
eClerx Services.
Operating Metrics;
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
Financials;
Narnolia Securities Ltd,
Sales Mix-Geography 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
North America 70% 70% 71% 75% 75% 74% 74% 74% 74%
Europe 24% 23% 20% 19% 18% 21% 21% 21% 21%
RoW 6% 7% 9% 6% 7% 5% 5% 5% 5%
Client Concentration 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
Top-5 86% 87% 80% 79% 78% 78% 76% 75% 74%
Client addition 8 10 8 4 7 6 5 5 2
Total Clients 53 55 54 54 60 73 61 65 65
DSO,days 52 29 30 41 31 33 35 41 33
Billing Mix 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
FTE 94% 95% 93% 93% 92% 91% 94% 95% 95%
SEZ Revenue 67% 72% 62% 58% 59% 60% 60% 60% 60%
Employee Metrics 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
Employee Utilization 72% 72% 68% 68% 69% 69% 66% 65.0% 66%
Attrition - 30.9% 23.2% 30.2% 26.5% 27.3% 25.2% 36.4% 31.8%
Total Employee - 4405 5545 5760 5837 5954 6389 6543 6620
Employee Cost 39% 45.1% 42.4% 46.0% 45.0% 45.2% 44.1% 42.2% 43.6%
Rs, Cr FY11 FY12 FY13A FY14E FY15E
Sales 366.12 495.19 660.58 852.54 1020.87
Empolyee Cost 147.65 203.87 295.28 370.00 449.18
Other expenses 59.87 79.28 108.47 130.44 158.24
EBITDA 158.6 212.04 256.83 352.10 413.45
Dep 9.13 12.89 25.53 33.10 43.10
EBIT 149.47 199.15 231.3 319.00 370.35
INT 0 0 0 0.00 0.00
Other Income 0 0 0 28.99 10.21
PBT 149.47 199.15 231.3 347.98 380.56
Tax 16.76 39.47 39.34 83.52 91.33
PAT 132.71 159.68 191.96 264.47 289.22
Growth-%
Sales-% 39.5% 35.3% 33.4% 29.1% 19.7%
PAT-% 80.5% 20.3% 20.2% 37.8% 9.4%
Margin-%
EBITDA 43.3% 42.8% 38.9% 41.3% 40.5%
EBIT 40.8% 40.2% 35.0% 37.4% 36.3%
PAT 36.2% 32.2% 29.1% 31.0% 28.3%
Expense on Sales-%
Employee cost-% 40.3% 41.2% 44.7% 43.4% 44.0%
Other expenses-% 16.4% 16.0% 16.4% 15.3% 15.5%
Tax Rate% 11.2% 19.8% 17.0% 24.0% 24.0%
Valuations
CMP 783.95 625 650 1212 1212
OS.Cr 2.9 2.958 2.9875 2.99 2.99
EPS 45.76207 53.9824 64.2544 88.52 96.81
NW 238.32 342.92 438.32 615.20 816.84
BVPS 82.17931 115.93 146.718 205.93 273.42
P/E (x) 17.131 11.5778 10.116 13.69 12.52
P/BV (x) 9.54 5.39 4.43 5.89 4.43
RoE-% 55.7% 46.6% 43.8% 43.0% 35.4%
1473
1779
1776
21
-
1M 1yr YTD
Absolute -10.2 -35.8 -35.8
Rel.to Nifty -5.9 -37.9 -37.9
Current 4QFY13 3QFY1
3Promoters 62.3 62.3 62.3
FII 8.8 8.9 9.8
DII 17.9 17.7 16.7
Others 10.9 11.1 11.2
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 32526 43291 44331 49365 58302
Total Income 48351 57643 60366 65288 74225
PPP 25336 31574 31081 29105 33401
Net Profit 8265 11707 14105 10241 11765
EPS 130.2 174.5 206.2 149.7 172.0
8
State Bank of India
During quarter SBI’s profitability declined by 34% largely due to higher
provisions and contingencies led by deteriorating asset quality and higher tax
in order to create DTL special reserve as per suggestion by RBI. However,
bank has seen growth in loan and deposits which translated into growth in
profit loss to some extent. Due to higher operating expenses, operating profit
growth was negative despite of 14% growth in revenue. We value bank at
Rs.1779/share which would be 1.1 times of FY14E’s book value.
Moderate NII growth led by lower growth in interest earnings assets than
interest bearing liabilities
Bank reported NII growth of 13.4% YoY to Rs.12641 cr lower than our expectation of
Rs. 12959 cr largely due to lower interest income from advances than higher
deposits and borrowing cost. Total income was grown by 13.7% YoY to Rs.16831 cr
supported by other income growth of 15% YoY to Rs.4190 cr. Other income growth
was led by exchange and commission income gain of Rs.2971 cr and forex income
Rs.643 cr.
500112
NSE Symbol SBIN
Mkt Capital (Rs Cr) 110126
SBI’s profitability was declined by 34% YoY largely due to higher provisions and
contingencies led by deterioration in asset quality and higher tax rate in order to
create DTL special reserve as per suggestion by RBI.
Average Daily Volume
Result update BUY
CMP
Target Price
Previous Target Price
Operating profit reported negative growth due to higher operating expenses
led by employee benefit provisions
Market Data
Upside
2469/1452
BSE Code
Change from Previous
SBIN Vs Nifty
Share Holding Pattern-%
9.44 lakh
Nifty 6048
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
Stock Performance
52wk Range H/L
Operating expenses increased by 31.4% YoY to Rs.9212 cr in which employee cost
and other operating cost increased by 35% and 25.7% respectively. Employee cost
was led by higher provision for pension and gratuity to the tune of Rs. 1355 cr as
against Rs.743 cr in 3QFY13 and Rs.1283 cr in 2QFY14. Adjusting the same,
employee cost increased by 8% YoY. Operating profit was declined by 2.2% YoY to
Rs.7618 cr. Cost income ratio increased by 735 bps YoY to 54.7% from 47.4% in
3QFY13.
Moderate NII growth, higher operating expenses and higher provision and tax
rate led profit de growth of 34% YoY
"BUY"17th Feb, 2014
Narnolia Securities Ltd,
9
State Bank of India
Please refer to the Disclaimers at the end of this Report.
Continue to report week trend of asset quality
During quarter bank increased provisions and contingencies by 37% QoQ to Rs. 4150 cr
due to deteriorating asset quality. In absolute term GNPA and net NPA increased by 6%
and 16% sequentially. In absolute term, GNPA and net NPA stood at 5.9% and 3.2%
versus 5.8% and 2.9% in 2QFY14 respectively. During quarter bank’s loan loss provision
increased by 29.6% sequentially and stood at Rs.23429 cr. Standard asset provisions
and depreciation provisions were Rs.196 cr and Rs.621531 cr respectively. Net
provisions were declined by 4% sequentially which resulted 16% rise in net NPA in
absolute term. Consequently provision coverage ratio without technical writ off was
declined by 475 bps QoQ to 45.2% from 50% in previous quarter.
Strong traction in loan and deposits growth
During quarter SBI’s profitability declined by 34% largely due to higher provisions and
contingencies led by deteriorating asset quality and higher tax in order to create DTL
special reserve as per suggestion by RBI. However, bank has seen growth in loan and
deposits which translated into growth in profit loss to some extent. Due to higher
operating expenses, operating profit growth was negative despite of 14% growth in
revenue. We value bank at Rs.1779/share which would be 1.1 times of FY14E’s book
value.
Loan grew by 17.4% YoY led by across the sectors. Loan to large corporate grew by 17%
YoY, mid corporate grew by 19%, SME grew by 14% and retail loan grew by 19%. Strong
traction in auto loan (21.2% YoY) and house loan (19.4% YoY) led retail loan growth.
Deposits grew by 17% YoY largely supported by 20% YoY growth in term deposits
followed by saving deposits and demand deposits which grew by 8% and 13%
respectively. Overall CASA ratio was declined by 153 bps YoY to 41%.
NIM declined on account of higher deposits cost and lower yield
SBI’s net interest margin was flat at 3.19% versus 3.18% in previous year. Domestic NIM
declined by 2 bps to 3.49% while oversea NIM declined by 1 bps sequentially to 1.49%.
Cost of deposits increased to 6.25% from 6.22% sequentially while yield on advances
inch up to 10.4% from 10.3% in previous quarter. Credit deposits ratio marginally
declined from 85.3% to 85.1%.
Valuation & View
Narnolia Securities Ltd,
10
State Bank of India
Source: Esatwind/Company
Please refer to the Disclaimers at the end of this Report.
Moderate NII growth led by lower growth in
interest earnings assets than interest bearing
liabilities
Operating profit reported negative growth due
to higher operating expenses led by employee
benefit provisions
Moderate NII growth, higher operating
expenses and higher provision and tax rate led
profit de growth of 34% YoY
Narnolia Securities Ltd,
11
State Bank of India
Source: Esatwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
Quarterly Performance 3QFY14 2QFY14 3QFY13 % YoY % QoQ 3QFY14E Variation(%)
Interest/discount on advances / bills 26310 25379 22800 15.4 3.7 25937 1.4
Income on investments 8228 8137 7072 16.3 1.1 8303 -0.9
Interest on balances with Reserve Bank of India 92 106 110 -16.1 -13.0 109 -15.9
Others 241 300 362 -33.3 -19.7 349 -30.9
Total Interest Income 34870 33922 30344 14.9 2.8 34699 0.5
Others Income 4190 3278 3648 14.9 27.8 3876 8.1
Total Income 39061 37200 33992 14.9 5.0 38575 1.3
Interest Expended 22230 21671 19189 15.8 2.6 21739 2.3
NII 12641 12251 11154 13.3 3.2 12959 -2.5
Other Income 4190 3278 3648 14.9 27.8 3876 8.1
Total Income 16831 15529 14803 13.7 8.4 16835 0.0
Employee 5867 5819 4351 34.8 0.8 6364 -7.8
Other Expenses 3345 3399 2661 25.7 -1.6 3737 -10.5
Operating Expenses 9212 9218 7012 31.4 -0.1 10101 -8.8
PPP( Rs Cr) 7618 6312 7791 -2.2 20.7 6734 13.1
Provisions 4150 3029 2668 55.5 37.0 3112 33.3
PBT 3469 3283 5123 -32.3 5.7 3622 -4.2
Tax 1234 908 1727 -28.5 36.0 1087 13.6
Net Profit 2235 2375 3396 -34.2 -5.9 2535 -11.9
Balance Sheet (Rs Cr)
Deposits 1349940 1292456 1156691 16.7 4.4 1337803 0.9
Borrowings 189969 188937 148374 28.0 0.5 202402 -6.1
Investments 426728 398536 359959 18.5 7.1 415135 2.8
Loan 1148901 1103090 978115 17.5 4.2 1152774 -0.3
Asset Quality
GNPA 67799 64206 53458 26.8 5.6
NPA 37167 32151 25370 46.5 15.6
% GNPA 5.9 5.8 5.5
% NPA 3.2 2.9 2.6
PCR(%)(w/o technical write-off) 45.2 49.9 52.5
12
State Bank of India
Source: Esatwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
Income Statement 2011 2012 2013 2014E 2015EInterest/discount on advances / bills 59976 81078 90537 102590 120306
Income on investments 19826 23949 27200 32037 39720
Interest on balances with Reserve Bank of India 236 350 545 415 415
Others 1356 1144 1374 1253 1253
Total Interest Income 81394 106521 119657 136294 161693
Others Income 15825 14351 16035 15923 15923
Total Income 97219 120873 135691 152217 177616
Interest on deposits 43235 55644 67465 61066 70226
Interest on RBI/Inter bank borrowings 2562 3886 4124 10146 11668
Others 3071 3700 3737 0 0
Interest Expended 48868 63230 75326 86929 103391
NII 32526 43291 44331 49365 58302
Other Income 15825 14351 16035 15923 15923
Total Income 48351 57643 60366 65288 74225
Employee 15212 16974 18381 22795 25719
Other Expenses 7804 9095 10904 13388 15105
Operating Expenses 23015 26069 29284 36183 40824
PPP( Rs Cr) 25336 31574 31081 29105 33401
Provisions 17071 13090 11131 14253 16594
PBT 8265 18483 19950 14852 16808
Tax 0 6776 5846 4611 5042
Net Profit 8265 11707 14105 10241 11765
Deposits 933933 1043647 1202740 1383151 1590623
Change (%) 16.1 11.7 15.2 15.0 15.0
of which CASA Dep 461521 467607 539063 580923 668062
Change (%) 49 45 45 42 42
Borrowings 119569 127006 169183 215867 248248
Investments 295601 312198 350927 32037 39720
Loans 756719 867579 1045617 1202459 1382828
RatioYield on Advances 7.9 9.3 8.7 8.5 8.7
Yield on Investments 6.9 7.9 8.0 7.4 8.0
Yield on Funds 7.0 8.4 8.0 0.0 0.0
Cost of deposits 4.6 5.3 5.6 6.3 6.5
Cost of Borrowings 4.7 6.0 4.6 4.7 4.7
Cost of fund 4.6 5.4 5.5 5.4 5.6
Valuation
ROE(%) 12.7 13.9 14.3 9.3 9.8
Book Value 1023 1251 1446 1617 1617
P/BV 2.7 1.7 1.4 0.9 0.9
1M 1yr YTD
Absolute 1.1 57.1 82.9
Rel. to Nifty 4.7 55.2 70
Current 2QFY14 1QFY1
4Promoters 63.7 63.7 63.7
FII 22.5 22.8 22.9
DII 5.7 3.2 3.1
Others 8.1 10.4 10.4
Financials Rs, Crore
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 4312 4207 2.5 2865 50.5
EBITDA 2000 1843 8.5 1275 56.9
PAT 1531 1362 12.4 881 73.8
EBITDA Margin 46.4% 43.8% 260bps 44.5% 190bps
PAT Margin 35.5% 32.4% 310bps 30.8% 480bps
13
Please refer to the Disclaimers at the end of this Report.
Stock Performance-%
Share Holding Pattern-%
CMP 609
52wk Range H/L 650/385
NSE Symbol SUNPHARMA
524715
View & Valuation
One Year Price vs Nifty
(Source: Company/Eastwind)
126,119
Average Daily Volume 535293
Nifty 6048
The operating EBITDA for the quarter came at Rs 1975 Cr grew by 57 % YoY and OPM
stands at 46 %.There is improvement in OPM by 200 bps during the quarter owing to
stronger operating metrics. The RM cost as percentage of sales was 14 % versus 15 % for
the same corresponding period last fiscal. The employ cost as percentage of sales was 12
% in current quarter verses 14% for 3QFY13.The company managed to control its other
expenses during the 3QFY14 and has dropped by 100 bps at 24 % of the sales.
The net profit for the quarter came at Rs 1531 Cr compared to Rs. 881Cr for Q3 last year,
up 74% YoY. The NPM for the 3QFY14 came at 36%.The other income for the 3QFY4 was
Rs 134 Cr and Tax rate was at 12 %.
The company on its R&D said that in the 3QFY14, ANDA for 5 products were filed. After
counting these, and adjusting for filings that were dropped, cumulatively ANDAs for 468
products have been filed with the USFDA (as on December 31, 2013). ANDAs for 4
products received approvals in the third quarter, taking the total number of approvals to 337
(as on December 31, 2013). ANDAs for 131 products now await USFDA approval, including
14 tentative approvals.
Mkt Capital (Rs, Cr)
The management of the company after 3QFY14 results has revised its FY14E revenue
guidance to 29 % from 25 % earlier. Guidance is at constant exchange rate. The company
further said that capex for the FY14 would be on higher side of earlier guidance. The tax
rate for the full year would be 15 % and R&D expected to be in the range of 6-8% of the
Sales for the FY'14.
The stock at its CMP of Rs 609 is trading at 22.1x of one year forward FY14E EPS of 27.60
and company has posted very strong 3QFY14 results however on account stretched
valuations we do not see much upside to stock and therefore we turn neutral with TP
650.
SUNPHARMARobust Performance
Target Price 650
7%Upside
Change from Previous
Previous Target Price
Result Update NEUTRAL Sun Pharmaceuticals Industries limited posted 3QFY14 results above street expectations
with total revenues including other operating income at Rs 4312 Cr up 50.5 % YoY led by
robust growth in US formulations and Taro business. The stellar performance of company
was supported well from domestic operations as well. The US formulation business grew
by more 56 % YoY to USD 434 Mn while International formulation sales outside US grew
by 16 % YoY to USD 84 Mn. Overall international revenues accounted for more than 75%
of total revenues for the quarter. The Sales of branded prescription formulations in India
was Rs. 947 Cr up by 20% Yoy from Q3FY13 last year. The API business for the quarter
witness some decline with sales falls to Rs 174 Cr translating decline of 17 % YoY.Market Data
BSE Code
"NEUTRAL"17th Feb' 14
Narnolia Securities Ltd,
14
SUNPHARMA
Sales and PAT Trend (Rs)
(Source: Company/Eastwind)
Total revenues including other operating
income came at Rs 4312 Cr up 50.5 % YoY led
by robust growth in US formulations and
Taro business.
OPM %
(Source: Company/Eastwind)
NPM %
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
There is improvement in OPM by 200 bps
during the owing to stronger operating
metrics.
The NPM for the 3QFY14 came at 36%.The
other income for the 3QFY4 was Rs 134 Cr
Narnolia Securities Ltd,
BUY
1M 1yr YTD
Absolute -4.5 -3 -2
Rel. to Nifty -1.7 -4.3 -14
Current 2QFY14 1QFY1
4Promoters 36.8 36.8 36.8
FII 23.8 23.8 23.1
DII 10.6 10.9 10.8
Others 28.8 28.5 29.3
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 2282 2347 (2.8) 2070 10.2
EBITDA 403 533 (24.4) 492 -18.1
PAT 261 376 (30.6) 338 -22.8
EBITDA Margin 17.7% 22.7% (500bps) 23.8% (610bps)
PAT Margin 11.4% 16.0% (460bps) 16.3% (490bps)
15
Target Price 440
CIPLA
Result Update
CMP 381
Cipla Limited posted its 3QFY14 results with its standalone net revenues at Rs 2282 up 10
% YoY led by healthy growth in export business with well support from India operations to.
The revenues from export business including formulations and API grew by 36 % to 1509
Cr for the quarter while domestic business grew by 9% YoY to 1044 Cr. The growth in
export revenues was primarily due to growth in anti-retroviral, anti-cancer, anti-allergic and
anti-biotic segments.15%Upside
Change from Previous
Previous Target Price
Market Data
BSE Code 500087
The net profits for the quarter came at Rs 261 Cr and NPM stands at 11.43 %. The Rs 40
Cr Forex gain is included in the other income during the quarter. The tax rate for the quarter
was nearly at same rate as in corresponding last quarter at 25 %.
The Company filed 10 ANDA's in the last nine months and got 6 approvals for the same
period. It has 35 ANDA's under approval as on 31st December 2013. The few of the
approval products are commercialized. Cipla Medpro formed as acquisition of
Medpro,South Africa last year added 500 Cr to top line and 50 Cr to the operating profits
during the quarter.
One Year Price vs Nifty
(Source: Company/Eastwind)
30,591
Average Daily Volume 617290
Nifty 6,001
The operating EBITDA for the quarter under review came Rs 403 Cr and OPM at 17.88
%.The OPM declines by more than 600 bps YoY due to the increase in the R&D and the
ramp up in the Staff cost during the quarter. The employ cost as percentage of sales stands
at 14 % while it was 12 % for the same time last fiscal. The other expenses as percentage
of sales were 27% for the 3QFY14 versus 25 % in 3QFY13.The other expenditure
increased largely due to rise in R&D expenses and rise in the cost owing to filings and
setting up of the front end during the quarter. The R&D expenses 4.5% of Sales during the
quarter.
450/354
NSE Symbol CIPLA
52wk Range H/L
The stock at its CMP of Rs 381 is trading at 19.58 x of one year forward FY14E EPS of Rs
19.40.The stock has reacted negatively after 3QFY14 results however we don’t see any
downside risks to our estimates. We further believe that Cipla-Medpro would be earning
accretive in medium to long term horizons and we view the recent correction a good entry
point for the stock. We maintain our view BUY for the stock with Target Price of Rs
440.
Please refer to the Disclaimers at the end of this Report.
Stock Performance-%
Share Holding Pattern-%
Mkt Capital (Rs, Cr)
View & Valuation
The management of the company after the results said that the Global respiratory unit
expects some of launches in the next year. It has set up new global respiratory team during
the quarter. The Combination inhalers planned to launch in FY'15.Company expects to be
more than 5% of Sales on the back of ramp up filings for the FY'15.The Capex is 90 Cr
during the quarter and expects to be Rs 400 Cr FY'14. The Rollover Capex of previous year
is Rs 150 Cr during the year.
"BUY"14th Feb' 14
Narnolia Securities Ltd,
16
Revenue Trend %
(Source: Company/Eastwind)
OPM & NPM Trend %
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
Net revenues at Rs 2282 up 10 % YoY led by
healthy growth in export business with well
support from India operations to.
The OPM declines by more than 600 bps YoY
due to the increase in the R&D and the ramp
up in the Staff cost during the quarter.
CIPLA
Business Trend
(Source: Company/Eastwind)
The revenues from export business including
formulations and API grew by 36 % to 1509
Cr for the quarter while domestic business
grew by 9% YoY to 1044 Cr.
Narnolia Securities Ltd,
V- Somany Ceremics Ltd.
CMP 131
Target Price 115
95
Upside -12.2%
21.1%
BSE Code 531548
NSE Symbol
61/155
452
3,109
Nifty 6,001
1M 1yr YTD
Absolute 13.2 59.9 103.2
Rel. to Nifty 16.0 58.1 97.6
3QFY14 2QFY14 1QFY14
Promoters 63.3 63.3 63.3
FII 2.8 0.8 0.2
DII 1.7 1.9 2.0
Others 32.2 34.0 34.5
Valuations :
Financials Rs, Crore
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 284.5 305.6 -6.9% 267.2 6.5%
EBITDA 17.0 19.4 -12.8% 22.1 -23.3%
PAT 4.8 6.0 -20.5% 8.2 -41.4%
EBITDA Margin 6.0% 6.4% (40) bps 8.3% (230) bps
PAT Margin 1.7% 2.0% (30) bps 3.1% (140) bps
17
Management is expected to achive a top-line growth of arround 20-25% in FY14E.
Management Guidence FY14E
(Standalone) (Source: Company/Eastwind Research)
Please refer to the Disclaimers at the end of this Report.
At the current CMP of Rs. 131, the stock is trading at a PE of 15.1x and 11.0x of FY14E and FY15E.
The company can post RoE of 17.0% and 17.1% & EPS of Rs. 8.7 and Rs. 10.8 FY14E and FY15E.
We are downgrading the rating to "Reduce" and advise investors to book profits at current
level. Over the longer term, we expect the efforts to introduce new ventures, curtail costs and
the expected economic revival driven by an uptick in demand in the latter part of FY2015, to
boost its fortunes. In the interim period, we are reducing our target multiple to 10x of FY15E
and price target to Rs 115.
1 yr Forward P/B
Share Holding Pattern-%
Stock Performance-%
Market Data
Average Daily Volume
For Quarter Ended 2QFY14
• For the quarter ended September 2013, Somany Ceramic registered 6.5% rise in sales to Rs
284.5 crore.
• OPM fell 230 basis points to 6.0% taking OP down 8.3% to Rs 17.0 crore.
• Other income also rise 77.8% to Rs 48 lakh and interest cost decreased 8.9% to Rs 4.6 crore.
• As depreciation increased 9.1% to Rs 5.7 crore, PBT fell 41.1% to Rs 7.1 crore.
• Taxation fell 40.3% to Rs 2.3 crore (tax incidence grew from 32.5% to 32.9) and PAT fell 41.4%
to Rs 4.8 crore.
For Nine Month Ended 9MFY14
• For the nine month ended December 2013, Somany Ceramic registered 18.7% rise in sales to Rs
848.8 crore.
• However, OPM dived from 8.5% to 6.4% taking OP down 10.7% to Rs 54.5 crore.
• Other income jumped 28.1% to Rs 1 crore and interest cost decreased 8.2% to Rs 13.8 crore.
• As depreciation increased 8.7% to Rs 16.5 crore, PBT fell 20.3% to Rs 25.2 crore.
• Taxation fell to 15.5% to Rs 8.6 crore but tax incidence grew from 32.1% to 34.0% which finally
saw PAT falling 22.5% to Rs 16.6 crore.
Mkt Capital (Rs Crores)
52wk Range H/L
Previous Target Price
SOMANYCERA
Change from Previous
"Outlook Challenging in near term…….."
The Q3FY2014 results were weak marked by a double-digit decline in the profit after tax on the
back of subdued increase in fuel cost, dollar v/s rupee volatility and a pressure on the margin.
The management expect improvement in the demand conditions in the near term and guided a
revenue growth of 20% in FY14E-15E, however we expect the revenue growth to be
somewhere arround 12-15% and financial performance to remain weak on account of margin
pressure. Consequently, we are downgrading the rating to "Reduce" and advise investors to
book profits at current level. Over the longer term, we expect the efforts to introduce new
ventures, curtail costs and the expected economic revival driven by an uptick in demand in the
latter part of FY2015, to boost its fortunes. In the interim period, we are reducing our target
multiple to 10x of FY15E and price target to Rs 115.
Reduce
Result highlights :
Result update
"Reduce"13th Feb' 14
Narnolia Securities Ltd,
18
Please refer to the Disclaimers at the end of this Report.
(Ammount in crore) (Source: Company/Eastwind)
Somany Ceremics Ltd.
Key financials :
(Source: Company/Eastwind Research) (Figures In crore)
Narnolia Securities Ltd,
PARTICULAR 2009A 2010A 2011A 2012A 2013A 2014E 2015E
Performance
Revenue 446 542 720 879 1054 1250 1438
Other Income 2 3 1 1 3 3 3
Total Income 448 545 721 880 1056 1253 1440
EBITDA 42 56 68 74 86 83 95
EBIT 28 41 50 56 65 59 75
DEPRICIATION 14 15 17 18 21 24 26
INTREST COST 16 13 17 21 20 17 17
PBT 14 31 34 36 48 44 60
TAX 5 10 11 11 15 14 19
Reported PAT 9 20 24 25 33 30 41
Dividend 1 2 3 3 5 6 6
EPS 2.5 5.9 6.9 7.3 9.4 8.7 11.9
DPS 0.4 0.7 0.8 0.9 1.4 1.9 1.9
Yeild %
EBITDA % 9.5% 10.3% 9.4% 8.4% 8.1% 6.6% 6.6%
PBT % 3.0% 5.6% 4.8% 4.1% 4.5% 3.5% 4.2%
NPM % 2.0% 3.8% 3.3% 2.9% 3.1% 2.4% 2.9%
Earning Yeild % 28.5% 18.8% 18.0% 19.5% 14.6% 6.6% 9.1%
Dividend Yeild % 3.9% 2.2% 2.1% 2.5% 2.2% 1.4% 1.4%
ROE % 13.5% 24.6% 23.0% 20.1% 21.3% 17.0% 19.4%
ROCE% 12.3% 13.8% 15.7% 16.6% 17.8% 9.8% 12.0%
Position
Net Worth 65 83 104 126 153 177 211
Total Debt 138 162 158 151 142 130 130
Capital Employed 202 245 262 276 295 307 341
No of Share 3 3 3 3 3 3 3
CMP 9 31 38 38 65 131 131
Valuation
Book Value 18.8 24.0 30.1 36.5 44.4 51.2 61.2
P/B 0.5 1.3 1.3 1.0 1.5 2.6 2.1
Int/Coverage 1.7 3.1 2.9 2.7 3.3 3.4 4.4
P/E 3.5 5.3 5.6 5.1 6.8 15.0 11.0
Net Sales/CE 2.2 2.2 2.8 3.2 3.6 4.1 4.2
Net Sales/Equity 6.9 6.6 6.9 7.0 6.9 7.1 6.8
Coal India LTD.
261
307
330
18%
-7%
533278
176226 Fluctuation in Domestic and international coal price impacted coal offtake17622
6001
1M 1yr YTD
Absolute -1.3 -21.2 -21.4
Rel. to Nifty 2.8 8.8 8.6
Rescheduling Date of hearing stands a key concern3QFY14 2QFY14 1QFY14
Promoters 90.0 90.0 90.0
FII 5.5 5.5 5.4
DII 2.4 2.3 2.3
Others 2.1 2.2 2.4
Realization gain on Revised Coal Price
Financials : Q3FY14 Y-o-Y % Q-o-Q % Q3FY13 Q2FY14
Net Revenue 16928 -2.3 9.8 17325 15411
EBITDA 4104 -4.3 46.9 4288 2794
Depriciation 442 5.2 -10.7 420 495
Interest Cost 10 0.0 25.6 10 8
Tax 1930 4.9 36.6 1839 1412
PAT 3894 -11.4 27.6 4395 3052(In Crs)
19
Mkt Capital (Rs Crores)
372/238
Nifty
Meanwhile, Coal India Ltd is likely to get additional revenue of Rs 2,119 Crore in this fiscal
on account of revision in dry fuel prices.CIL (Coal India Ltd) has revised and rationalized
the basic notified prices of all the grades of non-coking coal except GI, G2 and G5.The
estimated additional revenue due to revision of basic notified price for the current
financial year is Rs 2,119 cr. Though the incremental revenue is a positive sign but it fails
to change our previous valuation.
Average Daily Volume (Nos.)
Please refer to the Disclaimers at the end of this Report.
Stock Performance-%
Share Holding Pattern-%
1 yr Forward P/B
Source - Comapany/EastWind Research
In this quarter the international coal price were relatively down by 9% against Q2FY14
while the domestic coal price were showed upward movement. So the Major domestic
consumers of coal imported coal at lower price, hence it impacted the off takes and
revenue of CIL slipped -2% YOY and unable to meet the target off takes. Govt decision
related labor strikes impacted the productions of CIL too. Sequential increase in tax rate
further contracted the NPM%. From January we have seen a recovery in international
coal price which is positive sign for CIL.
Competition Appellate Tribunal stays Rs 1,773 Crore fine on CIL, and will decide on the
matter on next hearing 16th April 2014 (Rescheduled from 11th Feb 2014). The quantum
of penalty Rs 1,773.05 Crore is equal to three per cent of the PSU's average turnover for
the last three years. We believe, A Rs 1800-crore fine could possibly mean less profits for
the company and less dividend income for its owners. But as the main owner, the
government, will pocket this amount in the form of a fine, it will not be poorer in any
way.
Market DataBSE Code
COALINDIA
CIL reported Rs.16928 Cr Sales (-2% YOY) against Rs.17325 Cr in Q3FY13 due to poor off
takes of the coal during the quarter. Q3FY14 PAT slipped to -11% to Rs.3894 Cr against
Rs.4395 Cr in Q3FY13.Q3FY14 EBIDTA/ton remained flat YOY at Rs.350/ton while it is
increased 36% through QOQ. EBIDTA margin corrected in this quarter to 24% from 18% in
Q2FY14.Depriciation slipped 11% to 442Cr against 495 Cr in Q2FY14, moderating the
burden on EBIDTA.
On the expenditure side contractual expenses increased ~20% to Rs.154/ton from
Rs.128/ton in Q2FY14.Powerfuel cost and other expenses per ton remained flat, while
cost of project per ton decreased to Rs149/ton from Rs.206/ton in the previous quarter.
Poor Realization of Coal India showed little uptick like 2% to Rs.1445/ton.NSE Symbol
52wk Range H/L
Upside
Change from Previous
Result UpdateCMP
Target Price
Previous Target Price
"Buy"14th Feb' 14
Narnolia Securities Ltd,
FY11 FY12 FY13 FY14E
50234 62415 68303 69960
7573 5123 6556 8372
1755 2013 2333 2591
4580 4901 5802 6049
20481 26705 27943 28943
40390 40857 50219 53705
9843 21558 18084 16255
1673 1969 1813 1860
79 54 45 34
5595 6484 7623 7310
10868 20588 17356 17921
33 51 36 40
FY10 FY11 FY12 FY13
431 431 436 452
416 425 433 465
1073 1183 1441 1468
404744 390243 377447 364736
1066 1105 1155 1240
20
Avg Man Power (in numbers)
Productivity Per Man
Coal Offtake in MT
Depriciation
Interest Cost
Tax
PAT
ROE %
OPERATING MATRIX
Coal Production in MT
Revenue Generation From unit Ton
View & Outlook
P/L PERFORMANCE
Net Revenue from Operation
Cost Of Projects & Contractual
Power and fuel
contractual expenses
Employee benefit Expence
Expenditure
EBITDA
Coal India LTD.
We revised our estimates due to sequential poor production and off takes of CIL. We
expect modest increase in sales volumes growth during FY2013-15 on account of poor
off take capabilities of CIL. Management showed his confidence about their coal
production target and coal off take target for FY2014E, in previous quarter, which is
482mt and 492mt respectively. But Due to sequential poor production and off take we
revised the target to 464mt and 475mt respectively. Also, we expect CIL’s margins to
decline during FY2014 due to lower e-auction realizations and higher staff costs/other
expenses. We are expecting flat sales growth for 2014.Coal India Ltd sprang a positive
surprise by reporting higher-than-expected realizations as well as earnings before
interest, tax, depreciation and amortization (Ebitda). Average price realizations
increased by 2.3% sequentially to Rs.1,444.87 per tonne which is positive sign for future
growth.
Earlier we suggested, if earnings falls, then price might go beyond 256, but p/b level
may be maintained , else we assume that since the company is a good dividend paying
company with Roe above 30% we assume p/b should remain above 3. We see Coal India
at a attractive valuation to go long from the current dips. So we stick to our previous
estimates and recommend Maintain Buy CIL at price dips with a target price of Rs.307/-.
Recommendation
Narnolia Securities Ltd,
FY10 FY11 FY12 FY13
6316 6316 6316 6316
20956 26998 34137 42156
27273 33314 40453 48472
343 1334 1305 1078
1620 33 0 0
2545 22461 28271 31144
772 645 829 837
1404 12387 15595 20447
5443 8490 9785 12385
0 779 759 712
12035 12065 12681 12754
2211 2057 1848 3496
610 845 1017 1181
4402 5586 6071 5618
2169 3419 5663 10480
39078 45806 58203 62236
8066 11180 13478 16189
17921 21646 24688 25479
FY10 FY11 FY12 FY13
0.0 5.7 5.5 4.0
0.0 17.3 32.6 27.5
4.9 22.8 29.2 52.7
1.7 4.3 4.3 4.2
1.0 3.7 3.1 2.8
FY10 FY11 FY12 FY13
10727 12819 16323 15948
-131 -3822 3565 -6839
10596 8997 19888 9109
950 697 -10410 -1833
2163 2911 -7382 -7852
13708 12606 2095 -575
Down 21% from its 52week High
Up 14% from its 52 week Low
21
Trading At :
Changes In Working Capital
Net Cash From Operation
Cash From Investment
Cash from Finance
Net Cash Flow during year
Cash from Operation
P/B
EPS
CASH FLOWS
Debtor to Turnover%
Creditors to Turnover%
Inventories to Turnover%
Cash and bank balances
B/S PERFORMANCE
Share capital
Reserve & Surplus
Total equity
Long-term borrowings
Short-term borrowings
Long-term provisions
Tangible assets
Capital work-in-progress
Long-term loans and advances
Inventories
Trade receivables
RATIOS
Coal India LTD.
Trade payables
Short-term provisions
Total liabilities
Intangibles
Short-term loans and advances
Total Assets
Narnolia Securities Ltd,
Narnolia Securities Ltd402, 4th floor 7/ 1, Lords Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
email: [email protected],
website : www.narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing “East wind” & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other mentioned
in this report/message.