NESTLE
Reco price: Rs 4,302
Target price: Rs 3,483
Nestle reported a mixed set of numbers, beating Angel Broking’s revenue expectation by 2 per cent. The estimate of earnings lowered 12 per cent. The company’s top line grew by 20.2 per cent YoY to Rs 1,763 crore, while the earnings grew by a disappointing 10 per cent YoY and stood at Rs 214 crore (against the expected growth of 24 per cent YoY). Operating margin contracted due to the inflated price of the raw material..
—Angel Broking
TVS MOTOR
Reco price: Rs 49
Target price: Rs 70
TVS Motor’s Q1 FY12 results were better than the expectations. Net sales went up by 25.3 per cent YoY to Rs 1740 crore, led by an increase in realisation (5 per cent YoY), price hike taken in April 2011, better product mix and 21 per cent increase in volumes. Ebitda margins were at 7.2 per cent, led by 260 bps decrease in other expenses and the recurring net profit was up by 45.6 per cent, YoY to Rs 59 crore. Moving forward, analysts expect a volume growth of CAGR by11.4 per cent over FY12-13. Currently, the stock is trading at 9.4 times of the FY12 estimated earnings. The stock is under pressure due to uncertainty over DEPB issues; however, analysts expect that the government may continue to give 6 per cent against the present 9 per cent of incentives under the Duty drawback scheme. Based on improved margin outlook and encouraging volume growth, SBI Cap has revised its rating from add to buy.
—SBI Cap Securities
M&M FINANCIAL SERVICES
Reco price: Rs 638
Target price: Rs 800
M&M Financial Services (MMFS’) results were inline with the expectations with net interest income (NII) at Rs 330 crore and net profit of Rs 100 crore. NII grew by 27.1 per cent YoY, driven by 5 per cent QoQ growth in assets under management (AUM) to Rs 15,870 crore, despite the contraction of 288 bps QoQ to 9.3 per cent. Asset quality deteriorated sharply as the GNPA increased by 23.5 per cent QoQ to Rs 680 crore and with the inadequate provisioning of net NPA that almost doubled sequentially to Rs 140 crore. Emkay has lowered its FY12-13 earnings estimates by 7 per cent/1.4 per cent for lower spreads. It expects 29 per cent CAGR in earnings over FY11-13. The Return ratios stood robust at 3.8 per cent RoAs and 23 per cent RoE.
—Emkay Global