Tuesday, May 31, 2011

Analysts' corner Bse Nse Stock

Ashok Leyland, Apollo Hospitals, Mphasis & GSPL

Reco price: Rs 51
Target price: Rs 68

Ashok Leyland has reported better-than-expected result for the fourth quarter of FY11. Earnings have beaten market estimates by 17 per cent on better-than-expected revenue and margin on higher non-vehicle sales (spares, defense kits among others). Revenue for the quarter increased 30 per cent y-o-y and margins improved 110 bps q-o-q. Management has cut industry volume for medium and heavy commercial vehicles to 8-10 per cent from an earlier estimate of 15 per cent. Profit margin is also expected to fall to 10-10.5 per cent from 11.2 per cent in FY11 on higher input cost and lower margin from newly launched U-Truck range. Considering the above factors and higher expenses on depreciation and interest, earnings projections for FY12 and FY13 have been cut by 2-3 per cent and target price lowered to Rs 68 from Rs 70. Maintain buy.

— Geojit BNP Paribas Financial Services

Reco price: Rs 476
Target price: Rs 520

Apollo hospitals (AHEL) has achieved good growth both in FY11 and the fourth quarter of FY11. FY11(consolidated) top line at Rs 2,605 crore, grew 28.6 per cent y-o-y on the back of a steady revenue growth from their increased network of hospitals and better performance from their standalone pharmacies segment. The Group has identified Tier-II cities across the country for its expansion plan and will undertake expansion in a phased manner, substantially increase its presence by FY12-13. AHEL telemedicine services segment is expected to bring in good revenues and spread the company’s brand name and reach to remote areas. Maintain Buy.

— Bonanza Portfolio

Reco price: Rs 476
Target price: Rs 480

Mphasis reported rupee revenue growth of 1.9 per cent to Rs 1,257 crore and volume growth of 2.5 per cent q-o-q. The gross margin declined 200 bps q-o-q to 26.9 per cent. There were one time expenses of Rs 27 crore due to client claims (Rs 8 crore), FPP expense (Rs 16 crore) and acquisition of large deal activity (Rs 3 crore). Offshore billing rate increased from $19/hr to $20/hr each for APO and ITO segments. Net profit declined 4.2 per cent q-o-q to Rs 217 crore. HP channel business contributed 67 per cent and declined 0.4 per cent q-o-q to Rs 831 crore but direct channel revenues grew strongly at 8.5 per cent q-o-q to Rs 415 crore largely due to deal wins in the emerging markets. Huge addition of 30 new clients, highest known in the last 3 years, and it included 17 new clients from the direct channel and remaining from the HP channel. Bankingcapital markets/insurance grew 7.5/6.9 per cent q-o-q, respectively. IT, communication and entertainment declined 3.7 per cent q-o-q and emerging industries increased 2.5 per cent q-o-q. Maintain hold.

— Pinc Research

Reco price: Rs 97
Target price: Rs 120

Gujarat State Petronet (GSPL) reported results below analysts estimates at revenue and Ebitda level due to lower volumes and lower realisation. However, net profit of Rs 150 crore was significantly ahead of estimates on account of depreciation write back of Rs 17 crore during the quarter. Revenue for the quarter was at Rs 250 crore, down 3.3 per cent y-o-y, mainly on account of lower transmission volume and transmission tariff. Ebitda during the quarter was at Rs 2.3 billion, down 5.4 per cent y-o-y, due to higher other expenditure which has grown by 29.9 per cent to Rs 21 crore. During the quarter depreciation cost has significantly declined 127.4 per cent, on account of change in depreciation rate to 3.17 per cent from 8.33 per cent resulting in a higher profitability. Transmission tariff declined 4.1 per cent y-o-y and volume dropped marginally by 2.4 per cent y-o-y to 35.5mmscmd. Current valuations look attractive at 9.3x FY13E EPS and 1.8x P/Bv, Maintain buy.  

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