Thursday, January 20, 2011

Analyst's corner Bse Nse Stock

Apollo Hospitals Enterprise, Mindtree, Exide Industries & Essar Oil

Apollo Hospitals Enterprise
Fair Value: Rs 533,
Current Price: Rs 454

Crisil Equities upgrades Apollo Hospitals Enterprise (Apollo’s) fundamental grade to 5/5 indicating excellent fundamentals. The revision in the fundamental grade is driven by consistent strong performance of the hospital business, improving profitability of the pharmacy business and the management’s decision to stop investing in non-core businesses. Apollo is well positioned to benefit from robust growth in the domestic healthcare industry, due to its strong brand recognition and superior service. Crisil Equities expects Apollo’s revenues to log a three-year compound annual growth rate of 19 per cent to Rs 3,430 crore in 2012-13 and EPS to improve to Rs 19.4 in 2012-13 from Rs 10.9 in 2009-10.

—Crisil Equities

Reco Price: Rs 541,
Target Price: Rs 700

MindTree’s Q3FY11 results were a mixed-bag. Revenue growth q-o-q was muted to Rs 380 crore. Ebitda margins got eroded 40 basis points q-o-q to 11.7 per cent. EPS grew 29.4 per cent q-o-q to Rs 7.46, due to lower tax rate of 9.8 per cent, restructuring losses and completion of acquisitions. Realisation were up 3.7 per cent q-o-q driven by IP sale of $0.6 million and contracts at higher realisations. Revenues from Kyocera fell due to the loss of one big client by Kyocera. Clients’ IT spending is positive, moreover, there is a pick-up in the discretionary spend and management is optimistic about volume growth in Q4FY11. Maintain accumulate.

—Prabhudas Lilladhar

Exide Industries
Reco Price: Rs 138,
Target Price: Rs 169

Exide Industries (EIL) reported its Q3FY11 results that were below brokerages’ estimates with net sales at Rs 1,049.1 crore, up 15 per cent y-o-y. Robust OEM demand (27 per cent y-o-y) caused a capacity crunch and lower than expected sales in the high yielding replacement segment. This coupled with increased raw material costs (2.1 per cent jump q-o-q) led to a steep drop in Ebitda margins (650 bps q-o-q decline). EIL was unable to cushion margins through price rise due to capacity shortages. Net profit came in at Rs 124.4 crore with margins at 11.8 per cent cushioned through dividend income of Rs 33.3 crore. In the industrial segment, the declining telecom and lower uptick from the railways segment has depressed margins and revenues . The company has entered into capacity expansions in the auto segment and is expected to have sufficient capacities post Q4FY11 to meet the rising OEM and replacement demand. Upgrade from buy to strongly buy.

—ICICI Securities Limited

Essar Oil
Reco Price: Rs 128,
Target Price: Rs 153

Essar Oil (ESOIL) processed 3.73 mmt of crude during Q3-FY11 (up 6.3 per cent y-o-y), with the cumulative throughput at 11.1 mmt for April-December. Capacity utilisation for the quarter stood at 105 per cent. Refining margins were at $7.21/barrel, up 226.2 per cent y-o-y. Sales tax benefits contributed $2.5/barrel to the company’s overall GRMs. ESOIL's Ebitda stood at Rs 730 crore (up 229 per cent y-o-y) was lower than estimates due to lower GRMs and higher operating costs . An arbitration award (Rs 50 crore) received in favour of the company was taken on books during the quarter, leading to a jump in other income, to Rs 100 crore. Overall, PAT was marginally below estimates at Rs 270 crore. Maintain buy .

—Edelweiss Securities Limited        

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