ICICI Bank, UTI Bank & Tata Power Results

RESULTS REVIEW/ QUARTERLY RESULT ANALYSIS: December 2004

Interest income grew 24.94 per cent to Rs 491.25 crore while interest expended rose 24.5 per cent to Rs 304.22 crore, resulting in a net growth of 25.67 per cent in interest income to Rs 187.03 crore. Cost of funds went down 76 basis points to 4.75 per cent.

Advances increased 57.5 per cent to Rs 13,149 crore while deposits rose 51 per cent to Rs 26,326 crore. Credit-deposit ratio improved marginally to 0.49 from 0.47.

Retail advances surged 110 per cent to Rs 3,917 crore and increased 750 basis points as a percentage of advances to 29.7 per cent.

NPAs shrunk to 1.3 per cent from 1.45 per cent though the bank cut provisions for bad loans by 95.8 per cent to Rs 2.6 crore.  The surge in interest income and advances reflects UTI Bank's growth. With the bank expected to make a GDR (global depository receipt) issue, its CAR will also improve.  For FY05, analysts expect an EPS of Rs 14.5-15. Given the current price of Rs 191.4, the stock trades at a P/E multiple of 12.7 times its forward earnings (current P/E stands at 14.6).  TATA POWER
Lower tariffs affect realisations  The MERC (Maharashtra Electricity Regulatory Commission) order to lower tariffs from Rs 3.4 per unit to Rs 3.05 per unit (a drop of 12.4 per cent) in June 2004 continued to take its toll on Tata Power's realisations. Realisations fell 13.51 per cent to Rs 869.61 crore. 

Tata Power
(In Rs crore)	Q3FY05	Q3FY04	% Change
Net sales	869.61	1005.42	-13.51
Other income	46.40	37.86	22.56
Operating profit	223.67	360.49	-37.95
OPM (%)	25.72	35.85	-
Net profit	137.27	184.49	-25.59
NPM (%)	15.79	18.35	-
EPS (Rs)	6.93	9.32	-
Trailing 12-month P/E			14.70

Following the order, Tata Power had managed to hold ground through measures (like better fuel mix) to improve its operational efficiency. But this time around operating profit declined 37.95 per cent to Rs 223.67 crore. Lower realisations dragged operating margin a whopping 1000 basis points to 25.72 per cent.

Fuel costs and cost of power purchased increased 2.5 per cent and 3.5 per cent to Rs 456.96 crore and Rs 103.4 crore respectively. Fuel cost accounted for 52.5 per cent of sales against 44.3 per cent.

Other income of the company (up 22.56 per cent to Rs 46.4 crore) includes profit on sale of long-term investments amounting to Rs 16.84 crore, which is non-recurring by nature.

Net profit was shielded to an extent by lower interest and depreciation charges - net profit dropped 25.59 per cent to Rs 137.27 crore while interest and depreciation charges fell 25 per cent and 30 per cent to Rs 42.88 crore and Rs 60.75 crore respectively.

Generation and sale of power declined - while generation fell about 3 per cent to 3241 million units, sale slumped 3.7 per cent to 3056 million units.

The company sold its 75 mega watt power plant at Wadi in Karnataka for Rs 235.45 crore. So, revenue from power supply and total expenditure are lower by Rs 15.26 crore and Rs 6.15 crore respectively.

 While the long-term picture for the power sector looks bright, Tata Power will have to deal with the pangs of lower tariffs. However, analysts say this will compensated by higher offtakes once distribution and reach increase.  Moreover, the company has commissioned a 120 mw plant in Jojobera in Jharkhand and a 1000 mw gas-based plant in Bangladesh which are expected to augur well for the company.  For FY05, analysts expect an EPS of Rs 24. Given the current price of Rs 360, the stock trades at a P/E multiple of 15 times its forward earnings (current P/E stands at 14.7).  TATA STEEL
Firm steel prices aid profit  Tata Steel posted stupendous results - net profit reported a massive jump of over 99.14 per cent to Rs 890.15 crore.  This was on back of firm prices which were higher by about 35 per cent y-o-y. Sales grew 41.76 per cent to Rs 3,731.29 crore. 

Tata Steel
(In Rs crore)	Q3FY05	Q3FY04	% Change
Net sales	3731.29	2632.03	41.76
Other income	33.80	26.24	28.81
Operating profit	1571.55	880.45	78.49
OPM (%)	42.12	33.45	-
Net profit	890.51	447.17	99.14
NPM (%)	23.87	16.99	-
EPS (Rs)	16.09	8.08	-
Trailing 12-month P/E			7.08

Production and sales of steel remained stagnant - while production fell 1 per cent to 10.29 lakh tonnes, sales increased by 1 per cent to 9.98 lakh tonnes.

Strong prices in the global market helped the company achieve a 40.2 per cent increase in its exports to Rs 502.69 crore.

The rise in steel prices also proved a boon for margins - operating margin was up 867 basis points to 42.12 per cent while net margin was up 688 basis points to 23.87 per cent.

EBITDA from the steel business was up 74.2 per cent to Rs 1,223.75 crore while that from ferro alloys and minerals posted a whopping increase of 427.8 per cent to Rs 207.28 crore.

Raw material costs increased 33.6 per cent to Rs 486.68 crore while purchase of finished and semi-finished steel increased 93.3 per cent to Rs 392.39 crore.

In pursuance of growth plans, the company has also signed a memorandum of understanding (MoU) with the Government of Orissa for setting up a 6 million tonne green-field integrated steel plant at Kalinganagar.

 Tata Steel has been a major beneficiary of rising steel prices globally which is mainly driven by China. Steel prices are expected to remain firm till the end of financial year 2005.  But analysts are of the opinion that one needs to exercise caution since any downturn in price trends could severely hit earnings. But even if prices fall, the company