35% Growth in Credit Card Business - HDFC Bank
Wednesday, August 06, 2008HDFC Bank's Credit Card division is upbeat on the Credit Card Business and expects to log a growth of 35% this year despite difficult macro environment in the banking industry.
HDFC Bank's Credit Card is the second largest issuer of Credit Cards [Visa + Mastercard] in India. HDFC has followed a unique business model and has 70% of its customers from its own Bank. It has issued 4.2 million credit cards [ Visa + Mastercard in Gold, Platinum and Signature Series]
Mr. Rao, head of Credit Cards said,
We are number one currently on an incremental basis in the issue of new credit cards and are very positive about this segment growth over the next 24 months.The bank is treating credit card as an entry level product after savings account and has still managed to have the lowest NPAs in the division and as a bank as whole as well.
Published by Webmaster @ 2:45 PM IST.
Madhucon projects - Embedded Assets and Projects
Tuesday, August 05, 2008Madhucon Projects Ltd (MPL) reported 1QFY09 results at Rs148mn (+60.8% yoy), ahead of estimates (Rs130mn), led mainly by higher revenues and margins. Revenues grew by 67.2% yoy to Rs2.4bn driven by a strong order backlog of Rs47bn as on 30th June 2008 (6.4x FY08 revenues) and scale up in execution of the company's BOT projects.
Operating margins fell by 50bps to 14% due to the impact of higher material costs in the company's fixed price captive BOT contracts. Interest expenses jumped 137.6% led by higher debt for equipment financing. Consequently, PAT increased by 60.8% yoy to Rs148mn.
MPL's coal mine in Indonesia are progressing is an hidden asset to the company. MPL has an outstanding order position of approximately Rs4,850cr. The order book comprises Roads (35%) - mainly Highways and Flyovers - Irrigation (31%), Power (19%) and Real Estate (15%). The company is expected to report a fully diluted EPs of Rs 16 to Rs 18 for FY09.
Published by Webmaster @ 1:05 PM IST.
Vishal Retail - Slowdown or consoldation ahead ?
Monday, August 04, 2008Vishal Retail's Q1FY09 net sales grew 18.26% to Rs 396.09 crore in Q1FY09 as compared to Rs 318.42 crore in Q4FY09 due to 10% higher footfalls. The operating profit stood at Rs 49.09 crore with a margin of 12.37% as against 10.88% in Q4FY08. This improvement in operating profit margin was on account of the enhanced contribution of private labels to 13.2% from 10% of sales in Q4FY08. Also, there was a marginal growth of 1.5% in sales per sq ft to Rs 1788 in Q1FY09 from Rs 1762 in Q4FY08. The net profit grew 36.5% to Rs 14 crore in Q1FY09 from Rs 10.4 crore in Q4FY08.
On the flip side, as per mgt, inventory position at the end of 1Q has worsened to Rs2800/sq ft (Rs6.5bn) vs Rs2580/sq ft (Rs5.6bn) as of FY08 end. Further, debt has gone up from Rs5.3bn to Rs6.5bn, pushing the debt-equity ratio beyond 2x.
DSP Merill expects the company to report an EPS of Rs 19 for FY09 while ICICI Sec expects the company to report an EPS of Rs 35. We find ICICI's expectations are really aggressive to meet in this market.
Published by Komal M @ 12:50 AM IST.
Ranbaxy Labs + Glaxosmithkline Pharma
Ranbaxy Labs: Ranbaxy's 2Q PAT (adjusted for forex impact) of Rs1.6bn was on the back of 13% revenue growth and modest margin improvement (17.8% vs 16.4% in 1QCY07). Reported PAT at Rs229mn was largely shadowed by Rs1.93bn forex translational loss. As a result, forecasts are lowered by 12-19% and we now model 34% CAGR in core profits (CY08-10E) and impact of FTF opportunities till 2010.
Timelines on Daiichi Sankyo's open offer remain intact (August 8th-27th). Management reiterates guidance of 20% top-line growth and 17-18% EBITDA margin. W.Europe markets continue to face pressures while growth outlook on RoW markets is robust. Complying with USFDA, to send necessary documents relating to district court motion on Poanta Sahib case by August 3rd, 2008. Ranbaxy is expected to report an EPS of Rs 16 to Rs 17 for year ending Dec-2008.
Glaxo Smithkline Pharma: GSK's revenues (net of excise) grew 11% YoY on a comparable basis; reported growth (6.3% YoY) is lower due to sale of the fine chemicals business. This was driven by healthy growth rates in priority products and vaccines.
GSK continues with its efforts to boost revenues. It launched Tykerb in 2Q and has entered into an in licensing deal with Astellas. It has entered into a co-promotion agreement with Daiichi Sankyo India for the antihypertensive drug Olmesartan Medoxomil and its combination products.
Gross margins improved 176bps YoY on the back of improving product mix (no fine chemicals; higher share of priority products within pharma). At the same time, strong control over costs translated into a 207bps YoY improvement in EBIDTA margins. GSK is expected to report an EPS of Rs 55 for FY08 ending in Dec-08.
Published by Webmaster @ 12:37 AM IST.
Bank of Baroda + Andhra Bank Outlook
Tuesday, July 29, 2008
Bank of Baroda reported 1Q09 profits up 12% YoY ahead of estimates. Key highlights are - Flat margins QoQ, strong fee income growth and no significant deterioration in asset quality. BOB's core fee incomes increased substantially (over 40% YoY). NIMs were flat QoQ (down 26bps YoY) with pressures building up on the domestic business. Expect moderate reductions in margins.Loan growth (42% YoY) was aggressive, especially offshore (+68% YoY), now 23% of book. Management suggests will continue to grow this strongly, though could scale back on domestic growth to 20-25% (+36% in 1Q09). Growth is fairly broad-based (retail, SME, agriculture), profitable for now.
Asset quality of the bank remains a positive - the coverage of the bank remains comfortable at around 72%. Reported NPL grew 6% QoQ in the quarter - however, adjusted for farm loan waiver, NPL grew 11% QoQ. Going forward Bank of Baroda is expected to report negative growth in EPS for FY09 - Rs 32 to Rs 35.
Andhra Bank: Andhra's 1Q09 profits down 45% YoY. Margins contracted significantly over the year and its relatively mid-market loan book is increasingly at risk. QoQ margins were stable; Andhra's relatively lower CASA ratio suggests that margins will continue to be under pressure. Key positive for the quarter though was the sustained growth in fee incomes (+28% YoY).
NPLs have increased a little (+5.5% QoQ); reported asset quality is still fine with Gross NPLs at 1.2% and over 90% loan-loss coverage levels. Andhra's loan book is relatively more exposed to agriculture and mid-market focused. Andhra Bank is expected to report flat EPS growth of Rs 11 to Rs 12 for FY09.
Published by Sunil K @ 10:46 AM IST.
PNB + HDFC Bank - Result Analysis
Punjab National Bank (PNB) has reported a net profit of Rs5.1bn. NII at Rs14.4bn, up 11% yoy and operating profit at Rs9.8bn, up 5.3% yoy, were inline with estimates. The NII growth was mainly led by healthy advances growth (up 19.6% yoy). The NIM's contracted by 39bps yoy. Nevertheless, lower provisioning and controlled Opex resulted in 20.3% yoy growth in net profit to Rs5.1bn.The asset quality improved further with GNPA and NNPA having declined to 2.8% (3.8% Q1FY08) and 0.6% (0.98% Q4FY08) respectively. Overall NPLs reduced in 1Q09, gross slippages were at 2% levels (management suggests this is temporary and expects improvements ). PNB's loan book, however, is relatively more exposed to agriculture and SMEs - susceptible to spillovers from the loan waivers and further environmental deterioration.
Analysts expect PNB to report flat EPS growth for FY09 at Rs 65.18.
HDFC Bank - HDBK’s profit and quality performance is largely along expected lines. HDFC Bank's earnings (up 45% YoY factoring impact of CBOP merger) ; driven by a 75% rise in top line (NII) and 40% jump in operating profits. Credit costs were up only 8% YoY; but the bank continues to keep its NPL coverage at 65-70% (specific) and at >100% (incl. general). This is in line with levels HDFC Bank maintained even earlier. Core fee income growth at 37% was lower than est. as there was minimal contribution from CBOP.
HDBK continues to grow aggressively. Loan book is up almost 15% qoq (ex-centurion), and asset behaviour beyond acquired NPA’s remains in line with historical trends. Centurion's acquisition has been expensive - in the actual price paid, the step down in operating and profit measures and the time consumed.
HDFC Bank is expected to report a fully diluted EPS of Rs 55 to Rs 57 for FY09.
Published by Sunil K @ 10:33 AM IST.
SBI + Union Bank Resulst Review
Monday, July 28, 2008SBI reported 15% growth in its net profits to Rs16.4 bn that came in line with consensus forecast. SBI's operating P&L seems to cope well with rising rates.
Pre-provisioning profits (ex treasury, one-offs) are up 28% YoY; with a 45% growth in fee incomes, 300+bps on margins (though down), and controlled costs.This, with a little help from provision write-backs, offset a relatively large MTM charge.
SBI's asset quality appears to have actually improved over the quarter. This would suggest a sharp turnaround from the previously weak quarter and is impressive. Management stays its high growth and market share gains course; appears to be working for now, though the environment suggests risks of this strategy are rising. SBI's sustains aggressive growth (30%yoy), market share gain strategy. Growth also appears fairly broad-based - across segments and offshore.
SBI is expected to report FY09 EPS of Rs 109, slightly below FY08 levels but still impressive with the challenging global financial scenario.
Union Bank of India: Union Bank reported NII of Rs8.1b v/s our est. of Rs7.8b. Adjusted NII growth is 21% QoQ and 13% YoY. Interest expense declined QoQ in absolute amount despite 3% growth in deposits. While reported margins are stable QoQ at 2.63%; we believe adjusted margins have increased by >40bp QoQ to 2.7% in 1QFY09.
Both loans and deposits grew at a reasonable pace; more important, it has continued to improve the loan mix towards higher yielding loans (SME, retail) and deposit mix toward more CASA. While there is scope for further improvement, Union has shown consistent progress over the last 3-4 quarters.
Union's asset quality was stable (ex-loan waiver impact), delinquencies contained and coverage remained high. UBI is set to increases its SME, retail and agri loan portfolios - segments that are currently under most pressure. Union Bank is expected to report FY09 EPS of Rs 28 to Rs 29.
Published by Komal M @ 10:57 AM IST.
ICICI Bank Results Below Expectations
India's worst private bank, ICICI Bank has reported results below expectations. ICICI reported 6% yoy decline in net profits to Rs7.3 bn. Slower than expected loan growth and a sharper than expected decline in non-interest income [NII] were the key factors.ICICI reported further deterioration in credit quality lead largely by uncollateralized lending. Gross and net NPA rose significantly on qoq and yoy basis. The increase in loan loss provisions is not commensurate with the level of increase in NPA.
Loan growth and NIM outlook would likely remain challenged by rising funding costs due to adverse asset-liability mismatch and dependence on wholesale deposits. All of the above would likely drive significant moderation in NII growth, in our view. Fee income growth will see further moderation due to anticipated slowdown in international banking business as well as retail banking fee income. Deterioration in credit quality would likely prompt the bank loan loss reserve ratio to rise going forward.
The difference between ICICI and HDFC or between K.V.Kamath and Deepak Parekh is evident - Kamath runs after top line without a second thought on quality of business while Parekh is behind bottomline with major focus on business quality. Parekh's HDFC Bank has beaten Citi and SBI to be the second largest credit card issuer in India with an enitrely new business model of lending.
Published by Webmaster @ 9:34 AM IST.
Ambuja Cements + Grasim - Quarterly Results Outlook
Saturday, July 26, 2008
Ambuja Cements: Ambuja's adj PAT came in at Rs3.4bn, 20% lower yoy on the back of a sharp rise in costs. Revenues grew 8% to Rs15.7bn on higher realizations. Margin pressures continued with EBITDA margins at 30% vs 38% last year and 31% in 1QCY08.Volumes were almost flat at 4.4m tonnes. While domestic volumes grew 5%, exports fell 70% to 76,000 tonnes as a result of the export ban during the quarter. Realizations increased 9% yoy to Rs3,587/t (4% qoq). There was a significant jump in raw material, power and fuel and staff costs. Raw material costs increased 65% yoy. Power and fuel costs rose 35% yoy and 25% qoq to Rs730/t. With 30% of its coal requirements being met via imports.
According to consensus estimates, future looks bleak for Ambuja cements as it is likely to witness negative growth in EPS to Rs 7.2.
Grasim Industries: Grasim's PAT came in at Rs5.1bn. EBITDA fell 5% yoy to Rs7.5bn and margins fell to 29% vs 32.5% last year. Cement & VSF margins declined yoy, while chemicals & sponge iron improved.
The cement division saw a decline in margins to 30% from 36% in 1QFY08, impacted by rising costs. Volumes grew marginally to 4m tonnes and realizations rose 9% yoy to Rs3,366/t (3% qoq) VSF's margins fell to 31% from 36% in 1QFY08. Chemicals benefited from an increase in realizations (+30%) and volumes (+11%). Sponge Iron business EBITDA margins rose to 30% from 16% on the back of strong realizations (+62% yoy).
In-line with Ambuja Cements, Grasim is also likely to witness negative growth in EPS as it is likely to report an EPS of Rs 248 for FY09.
Published by Sunil K @ 4:50 PM IST.
Tata Power + ABB - Powering CAPEX
Tata Power Company reported Q1 FY09 profits of INR 1.9 bn which is flat y-o-y. However, adjusting for the incentive gains, tax provisions and forex gains, the earnings would be lower by ~ INR 120 mn. This fall can be attributed to lower other income which fell from INR 685 mn to 483 mn y-o-y. The revenues increased 34% y-o-y to INR 20.5 bn on account of higher fuel costs which are passed through to tariff. Fuel cost increased 45% to 12,894 for the quarter on y-o-y basis.Tata Power's subsidiary have done exceptionally well in Q1. NDPL PAT is up 20% YoY to Rs339mn. Powerlinks PAT has increased 12% YoY to Rs90mn. Power trading subsidiary has increased its revenue by 160% to Rs4.13bn and PAT by 96% to Rs14.1mn.
All capacity expansion projects are running on time. Specifically Mundra UMPP - Construction is on in full swing and work on boiler and turbine for Unit 1 and 2 has started; Maithon - Ordering of equipment is complete and civil work has started; 250MW Mumbai - CoD will be achieved by October 2008 and Haldia expansion is being commissioned now. Tata Power is expected to report an EPS of Rs 28.8 for FY09.
ABB Ltd:
ABB's 2QCY08 PAT at Rs1.3bn up 21% YoY was expectations of Rs1.5bn primarily on account of slow sales growth of 15% YoY, led by execution of long cycle orders. Margins have held up well in an inflationary commodity price environment.
Order inflow growth was disappointing at 11% YoY, a clear sign of the difficult macro environment led by double-digit inflation, rising energy costs, volatile commodity prices and high interest rates.
Brokerages have cut earnings estimate for ABB by 8-10% and the company is now expected to report an EPS of Rs 28.77 for year ending Dec-2008.
Published by Webmaster @ 3:53 PM IST.
