Result Review 4QFY2013

Cairn India

Cairn India 4QFY2013 results which were below our expectations on the profitability front whereas top line was in line with our expectations. The company’s top line increased 19.5% yoy to `4,363cr (in line with our expectation of `4,393cr) due to higher volumes and higher rupee realizations. The company’s gross production averaged 202,014boepd (+12.0% yoy) during the quarter. Although gross crude oil realization decreased by 9.1% yoy to US$100.6/bbl, INR depreciation against the USD offset this impact. EBITDA grew by 9.3% yoy to `3,258cr; however, EBITDA margin contracted by 698bp yoy to 74.7%. The company recorded an exceptional forex loss of `3cr on account of forex fluctuation during 4QFY2013. Excluding this exceptional loss, adjusted net profit grew by just 6.8% yoy to `2,566cr (below our estimate of `2,819cr). Reported net profit grew by 17.3% yoy to `2,564cr. Source: AngelBroking

Ultratech

Ultratech’s 4QFY2013 stand-alone topline was below estimates at `5,389cr on account of both lower than estimated volumes and realization. The company’s grey cement volumes (incl. clinker) remained flat yoy at 11.13mn tonnes. White cement volumes fell by 4.3% yoy to 0.16mn tonnes. Blended realizations for the quarter stood at `4,727/tonne, higher by 1% on a yoy basis. However, the company’s operating costs/tonne was below estimates resulting in a superior OPM of 23.4% vs. estimated 21.5%. Interest expenses too was lower by 18.4% yoy at `48cr. Net Profit fell by 16.3% yoy to `726cr and was in-line with estimates. Meanwhile there are media reports that Ultratrech is in final-stage talks to buy Jaypee Associates 4.8mtpa cement plants in Gujarat for `4,100cr. The news has not been confirmed by management of both the companies. Source: AngelBroking

MLIFE 

For 4QFY2013, Mahindra Lifespaces Developers (MLIFE) reported a weak set of numbers both on revenue and profitability front. MLIFE’s standalone revenue for the quarter came in at `102cr, i.e a decline of 27% yoy which was below consensus estimate of `120cr. Standalone EBITDA decreased by 46.1% yoy to `17cr, owing to lower-than-expected revenue recognition. PAT for the quarter decreased by 27.7% yoy to `23cr. On a consolidated level, MLIFE reported a revenue of `368r and PAT of `82cr, suggesting a profit for its subsidiaries at net level. During the quarter, the company has acquired two land parcels one each in Bangalore and Mumbai region. Both the land parcel put together has a development potential of 1 mn sqft. Source: AngelBroking

Tata Sponge Iron

For 4QFY2013, TSIL reported a topline of `211cr, 7.1% higher than our estimate of `197cr. However, the results were disappointing on the EBITDA margin front which contracted by 502bp yoy to 8.8% as compared to 13.9% during 4QFY2012. Contraction in EBITDA margin was primarily due to higher raw material cost and employee expenses during the quarter. Consequently, net profit declined by 36% yoy during the quarter to `9cr. For the full year FY2013, revenue grew by 25.5% yoy to `796 on account of better realization of sponge iron and resumption volumes of sponge iron sales which were impacted during FY2012 due to iron ore supply issues; while increased raw material cost and employee expenses led to contraction of EBITDA margin by 273bp for FY2013. Net profit for FY2013 stood at `85cr as compared to `76cr in FY2012. Source: AngelBroking

Infosys 4QFY2013

For 4QFY2013, Infosys reported yet another disappointing quarterly result. The dollar revenues grew by just 1.4% qoq (Estimate: ~4% qoq) to US$1,938mn, much lower than our as well as street expectations. Excluding Lodestone, the USD revenue grew by just 0.8% qoq. Overall volume growth came in at 1.8% qoq (4.8% onsite volume growth and 0.5% offshore volume growth). Overall pricing declined by 0.7% qoq, impacted by lower billing days qoq and revenue mix shift towards lower bill rate services. In INR terms, revenue came in at `10,454cr, up merely 0.3% qoq. The company’s EBITDA and EBIT margin declined by 199bp and 213bp qoq to 26.5% and 23.6%, respectively, due to negative impact of onsite wage hikes given during the quarter. Pricing pressure witnessed by the company also weighed on margins during the quarter by ~2%. The PAT was held up at `2,394cr, aided by other income of `674cr vs. `503cr in 3QFY2013. The most disappointing thing was FY2014 USD revenue growth guidance of 6-10% which is way below street expectations of 12-13%. The range of the guidance is wide which indicates the volatility foreseen by the management. Also, the company has not put out any EPS guidance for FY2014 which could signify that there is risk towards the operating margin profile going ahead. Management commentary indicates that the environment remains challenging and the company continues to see delays in decision making from clients’ ends. Management indicated that pricing pressure is seen for typical IT operations kind of services which are mostly non-discretionary in nature. Over FY2012-14E, we expect USD and INR revenue CAGR of 8.7% and 8.2%, respectively. The company is now highly focused on growth and that many lead to sacrifice in terms of margins in the near term. At the CMP of `2,297, the stock is trading at 13.6x and 12.6x its FY2014E and F2015E EPS, respectively, which appears to be attractive compared its historical valuation. However, huge volatility in quarterly performance is unlikely to fetch Infosys a higher multiple in the near term. Source: AngelBroking

Hindustan Zinc reports 4QFY2013 production numbers

Hindustan Zinc (HZL) reported its production numbers for 4QFY2013. Its mined metal production grew by 16% yoy to 223kt. Its integrated lead production grew by 2% yoy to 32kt. Its integrated zinc production declined by 4% yoy to 181kt and it sold 61kt of zinc concentrates. Source: AngelBroking

Coal India reports production and offtake for February 2013

Coal India (CIL) reported its February production and offtake numbers. The production was 42.6mn tonne in the month of February which was 4% below the target set by CIL while the offtake was 39.7mn tonne, ie 3% below their target. We maintain our production and offtake targets at 458mn tonne and 470mn tonne, respectively, for FY2013. Source: AngelBroking

Cement dispatches – February 2013

Cement demand continued to remain weak during February 2013 as economic slowdown impacted construction activities. Prolonged cold weather too impacted demand in some regions during the month. During February 2013 Ultratech Cement posted a 5.9% yoy decline in cement dispatches to 3.31mn tonnes. Shree Cement too posted a 16% yoy decline in dispatches to 0.97mn tonnes. JK Lakshmi Cement posted a marginal 1.3% yoy decline in dispatches. However, Dalmia Bharat Cement a south based player posted an impressive 33% yoy growth in dispatches for the month of February. Source: AngelBroking

Bajaj Auto registers sluggish monthly sales in February 2013

Bajaj Auto (BJAUT) reported lower-than-expected sales for February 2013 primarily on account of sluggish demand in the domestic motorcycle segment. Total volumes for the month registered a decline of 3.3% yoy (4.4% mom) to 332,387 units as domestic volumes posted a sharp decline of 10.8% yoy (10% mom).Three-wheeler sales during the month too reported a decline of 1.7% yoy (11.2% mom). The export volumes however, registered a healthy growth of 10.8% yoy (5.2% mom). At the CMP of `1,984, the stock is trading at 15.7x FY2014E earnings. Source: AngelBroking

Auto sales numbers – February 2013

Ashok Leyland 

Ashok Leyland (AL) reported slightly lower-than-expected volumes led by continued weakness in the medium and heavy commercial vehicle (MHCV) segment, which declined by 26% yoy (up 2.6% mom) to 7,045 units. Consequently, total volumes declined 9.5% yoy (4.9% mom) to 10,046 units. Dost, however, maintained its steady performance and recorded sales of 3,001 units. Source: AngelBroking

Tata Motors

Tata Motors (TTMT) reported in-line volumes for February 2013 with total volumes registering a decline of 32.7% yoy to 61,998 units led by 33.1% and 26.2% yoy decline in domestic and export volumes respectively. The domestic performance was severely impacted on account of deteriorating sales performance in the MHCV and passenger vehicle segments which witnessed a significant decline of 45% and 69.5% yoy respectively. The light commercial vehicle sales however maintained momentum, posting a strong growth of 13% yoy. Source: AngelBroking

Mahindra and Mahindra

Mahindra and Mahindra (MM) reported an in-line volume growth of 7.3% yoy (down 6.4% mom) in February 2013 as the farm equipment segment continued to post decline in sales. However, the automotive segment registered a healthy growth of 11% yoy (down 3.4% mom) driven by continued traction in the passenger vehicle segment (up 13.8% yoy) on the back of the new launches XUV5OO, Quanto and Rexton. The three-wheeler segment however registered a sluggish growth with volumes declining by 6% yoy (17.3% mom). The export volumes staged a recovery during the month and posted a strong 30.4% yoy growth (106.1% mom) to 3,425 units. In the farm-equipment segment, MM posted a decline of 3% yoy led by weakness in domestic markets, which posted a decline of 3% yoy during the month. Source: AngelBroking

Maruti Suzuki 

Maruti Suzuki (MSIL) reported in-line volumes for February 2013, primarily driven by growth in the Super Compact (up 21.6% yoy and 7.4% mom) and Utility Vehicle segments led by Dzire and Ertiga respectively. Total volumes for the month registered a decline of 7.9% yoy (4.1% mom) to 109,567 units largely due to the slowdown in demand for entry levels cars and vans. As a result, the Mini and Vans segments witnessed a steep decline of 15.9% yoy (11.1% mom) and 38.9% yoy (2.9% mom) respectively. The Compact segment too registered a decline of 13.9% yoy during the month. Export volumes on the other hand registered a modest growth of 2.8% yoy (3.9% mom) as demand in key export markets continues to remain weak. We believe that MSIL will miss out on its volume growth guidance of 5.5-6% for FY2013; though by a small amount. MSIL has registered a total volume growth of 4.3% YTD in FY2013. Source: AngelBroking

Hero MotoCorp

Hero MotoCorp (HMCL) registered a lower-than-expected performance in February 2013 with total sales posting a decline of 4.2% yoy (10.1% mom) to 501,271 units led by slowdown in the industry volumes. Meanwhile, the workers at the company’s Gurgaon plant have resorted to indefinite hunger strike as announced earlier to pressurize the Management to reach a wage settlement. This is following an inconclusive meeting with the Management on February 22, 2013. However, as per the reports, the production at the plant has not been impacted. Source: AngelBroking

TVS Motor

TVS Motor (TVSL) reported lower-than-expected volumes in February 2013 with total volumes posting a decline of 3.7% yoy (5.8% mom) to 165,696 units. The weakness was primarily on account of slowdown in two-wheeler volumes (down 4.8% yoy) led by motorcycle and scooter sales which registered a decline of 3.2% and 16.6% yoy during the month. The three-wheeler sales however, maintained momentum and posted an impressive growth of 56.6% yoy. Source: AngelBroking