ICICI Bank
ICICI bank delivered a healthy performance for 4QFY2013, with net profit growth of 21.2% yoy. On the operating front, the bank witnessed a healthy 22.5% yoy growth in its Net interest income, however disappointment on the non-interest income front with a flat yoy performance, limited the operating profit growth to 15.8% yoy. On the asset quality front, while the bank reported sequentially stable NPA ratios, however, incremental restructuring at around `1,200cr, came in on expected lines. Business growth moderate; NIMs improve sequentially by 26bp: During 4QFY2013, the bank’s advances grew by 14.4% yoy, aided by a strong 29.9% yoy growth in the domestic corporate book. The growth in the retail portfolio was moderate at 11.4% yoy. On the deposits front, the bank witnessed moderate growth of 14.3% yoy. CASA accretion remained moderate at 10.4% yoy, primarily aided by savings deposits, which increased by 12.6% yoy, even as current deposits declined by 10.4% yoy. CASA ratio was higher by 100bp qoq to 41.9%. The reported overall NIM improved by 26bp qoq to 3.33%, mainly on account of 23bp sequential improvement in the domestic NIM to 3.7%, while international NIM’s remained stable sequentially. The non-interest income (excluding treasury) de-grew by 9.9% yoy basis to `1,866cr, however the bank registered higher treasury gains of `342cr during the quarter (primarily bond gains) as against `158cr in 4QFY2012, which aided it to report flat performance on the overall non-interest income front. On the asset quality front, the bank reported stability, as Gross and Net NPA levels remained flat sequentially, on an absolute basis. Gross NPA ratio declined sequentially by 9bp to 3.2%, while net NPA ratio came in flat at 0.8%. During the quarter, the bank restructured loans worth `1,146cr (though higher, but was on expected lines), thereby taking its restructured book to `5,315cr.Outlook and valuation: The bank’s substantial branch expansion in the past three to four years is expected to sustain a far more favorable deposit mix going forward. Moreover, a lower risk balance sheet has driven down NPA provisioning costs, which we believe will drive a 15.7% CAGR in net profit over FY2013-15E and enable a RoE of 16.5% by FY2015E (with further upside from financial leverage). At the current market price, the bank’s core banking business (after adjusting `158/share towards value of the subsidiaries) is trading at 1.72x FY2015E ABV (including subsidiaries, the stock is trading at 1.66x FY2015E ABV). We value the bank’s subsidiaries at `158/share and the core bank at `1,149/share (2.0x FY2015E ABV). Source: AngelBroking
Maruti Suzuki
For 4QFY2013, Maruti Suzuki (MSIL) reported extremely strong results (pre SPIL merger), beating ours as well as consensus estimates by a significant margin. The top-line registered a healthy growth of 9.1% yoy (14.2% qoq) to `12,793cr which was broadly in-line with our estimates. The top-line performance was primarily driven by a strong 14.7% yoy (flat qoq) growth in net average realization led by better product-mix (higher share of Swift, Dzire and Ertiga), price hikes and lower levels of discounts (at `10,500/unit vs `12,100/unit in 3QFY2013). The volumes however, registered a decline of 4.6% yoy led by the weak demand for entry segment cars (down 13.7% yoy) and slowdown in exports (down 10.5% yoy). The export revenue for the quarter stood at `1,530cr (strong growth of 23% yoy and 15.9% qoq) driven by a robust net average realization growth of 37.4% yoy (8.2% qoq). Nevertheless, the bottom-line at `1,148cr (79.3% yoy) was substantially ahead of our expectations driven by strong expansion in EBITDA margins (up 306bp yoy and 243bp qoq to 10.4%), higher other income (up 120% qoq) and lower tax rate (17.1% vs. 25.8% in 3QFY2013). MSIL’s EBITDA margin registered a sharp expansion of 306bp yoy to 10.4%, which was significantly ahead of our estimates of 8.6%. The EBITDA margin expansion was led by better product-mix, price hikes, lower average discounts and favorable currency movement (+ve impact of ~120bp qoq). The raw-material cost as a percentage of sales declined 310bp yoy to 76.5%, led largely by superior product-mix (towards Swift, Dzire and Ertiga), positive impact of Yen depreciation and ongoing cost reduction initiatives. Due to the favorable movement in exchange rate, the royalty outgo during the quarter stood at 4.8% (down 30bp yoy and 80bp qoq). During the quarter, MSIL merged its engine manufacturing subsidiary Suzuki Power Train India (SPIL) with itself through a share swap ratio of 1:70 as announced earlier. Going ahead, the ongoing weakness in Yen (down ~10% yoy against INR in YTDCY2013) which partially benefited EBITDA margins in 4QFY2013 is expected to enhance profitability in FY2014 as the favorable currency impact on indirect exposure is expected to reflect completely in FY2014. We expect EBITDA margins to improve 150bp in FY2014 driven by favorable product-mix and currency movement, lower discounts, ongoing cost reduction initiatives and also on account of the SPIL merger. As a result, we expect MSIL to register strong earnings CAGR of ~25% over FY2013-15. At `1,673, MSIL is trading at 13.6x FY2015E earnings (including the impact of SPIL merger).Source: AngelBroking
Hero MotoCorp
Hero MotoCorp (HMCL) reported better-than-expected results for 4QFY2013 led by sequential improvement (up ~120bp) in operating margins to 13.8%. The margin improvement was largely due to the depreciation of Yen (vs. the INR) which led to significant savings on the raw-material front. While the top-line growth was largely in-line with our estimates; bottom-line came in 16.7% ahead of our estimates driven by strong operating performance. For 4QFY2013, HMCL’s top-line recorded a modest growth of 1.8% yoy (down 0.7% qoq) to `6,146cr driven primarily by 4.8% yoy (1.7% qoq) growth in net average realization. Volume performance however was subdued (down ~3% yoy and qoq) owing to slowdown in demand and increasing competition from Honda Motors and Scooters India. The operating performance witnessed a sharp improvement during the quarter as margins expanded ~120bp qoq to 13.8% led by 3.2% decline in raw-material cost. We believe this could possibly be on account of ongoing depreciation in Yen vs. the INR. Led by better-than-expected operating performance, bottom-line registered a robust growth of 17.7% qoq to `574cr, which was ahead of our expectations of `492cr. On a yoy basis though, net profit declined 4.9% following 150bp decline in operating margins. At the CMP of `1,597, the stock is trading at 11.8x FY2015E earnings. We shall release a detailed note post the conference call with the management which is scheduled on April 29, 2013. Source: AngelBroking
LIC Housing
LIC Housing Finance reported a healthy set of numbers for 4QFY2013, with net interest income growth of 20.3% yoy and earnings growth of 24.7% yoy. Key highlights from the results were sequentially improvement in NIMs (36bp) and stability witnessed on the asset quality front (Gross NPA ratio at 0.61% and Net NPA ratio at 0.36%). NIM improved qoq; Asset quality improved: LICHF’s loan book grew strongly by 23.3% yoy to `77,812cr during 4QFY2013. Loans to the individual segment grew by 25.5% yoy, while loans to the developer segment declined by 16.3% yoy. Hence, the share of developer loans declined from 3.9% in 3QFY2013 to 3.4% for 4QFY2013. The margins remained flat yoy at 2.45%, however, were higher by 36bp sequentially primarily due to the 27bp decline in cost of funds. During the quarter, the company witnessed improvement in asset quality, as gross and net NPA levels declined sequentially by 12.5% and 15.8%, respectively, on an absolute basis. Gross and Net NPA ratios, improved by 13bp and 9bp, respectively to 0.61% and 0.36%. Provision coverage ratio improved sequentially from 39.1% to 41.4%. Outlook and valuation: At the CMP, the stock is trading at a P/ABV multiple of 1.4x FY2015E ABV. The stock rating and target price is currently under review.Source: AngelBroking
Goodyear India
For 1QCY2013, Goodyear reported a better-than-expected top-line of `337cr, marginally higher on a yoy basis from `331cr in 1QCY2012. A decline in raw material cost led to an expansion of the EBITDA margin by 302bp yoy from 6.0% in 1QCY2012 to 9.0% in 1QCY2013. This margin expansion coupled with higher
other income led to a stupendous growth in net profit of 90.6% yoy to `21cr from `11cr in 1QCY2012. Though a slowdown in auto industry is expected to keep revenue growth restrained, we believe lower rubber prices would help growth in net profit, going forward.Source: AngelBroking
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