PURAVANKARA PROJECTS
Reco price: Rs 111, Target price: Rs 171
Puravankara Projects (PPL) reported a robust set of numbers with revenue, earnings before interest, taxes, depreciation and amortisation (Ebitda) and profit after tax (PAT) growth of 81 per cent, 258 per cent and 198 per cent year-on-year (y-o-y) respectively. The company recorded a robust Ebitda margin of 33 per cent for the first time after Q2FY09 (second quarter of financial year 2008-09). Depreciation has also gone up sharply due to increased charges on plant and machinery, vehicles and shuttering material. Selling, general and administration (SG&A) has come down largely due to lower expenses on advertising and sales promotion, as there were no new launches in the quarter. The cost of interest is about 14.4 per cent, which increased 60 basis points (bps) from Q3FY10. PPL is looking to launch about 19 million sq ft during FY11E (estimated). This includes 12 million from PPL, 6 million under Provident, 1-2 million sq ft under Homex (affordable housing). Maintain buy.
— Ambit Research
ESSEL PROPACK
Reco price: Rs 49, Target price: Rs 58
Essel Propack’s (EPP) March quarter of FY2010 results were below expectations, primarily due to the lower Ebitda margin, higher tax rate and slow off take from customers during the quarter. EPP continued to be profitable on the back of its stringent cost-cutting initiatives, increasing contribution from high-margin products and a better production mix in its various geographies. The Ebitda margin (excluding medical business) came in at 16 per cent, 100 bps lower than that in the same quarter last year. Expect the company to ramp-up its operations, going ahead. The company’s European operations pruned losses to a great extent in the same quarter. Consequently, the Poland plant has broken-even on the Ebitda front, but not on the PAT front, which we expect to happen in a quarter’s time. Maintain buy.
— Angel Securities
CADILA HEALTHCARE
Reco price: Rs 560, Target price: Rs 330
Cadila’s Q4FY10 adjusted profit after tax (APAT) is ahead of street expectations with 71 per cent growth at Rs 130 crore despite lower-than-expected growth in revenue to Rs 820 crore. This is mainly because of robust operating performance where Ebitda grew 48 per cent to Rs 190 crore. The revenue was impacted due to lower-than-expected growth in domestic formulation business. On the operating front, Ebitda improved 48 per cent to Rs 190 crore in Q4FY10. Despite higher raw material (RM) cost and higher employee cost, Ebitda margins improved 410 bps to 22.4 per cent, mainly because of a 490-basis point reduction in other expenditures. Steady revenue growth, strong operating performance coupled with lower interest cost and lower tax provision resulted in 71 per cent growth in APAT to Rs 130 crore. Earnings estimates for FY11 and FY12 are Rs 31.9 and Rs 40 per share, respectively. Maintain buy.
— Emkay Research
PATNI COMPUTERS
Reco price: Rs 534, Target price: Rs 673
The revenue growth of 1.3 per cent in dollar terms was entirely led by volumes, while the pricing was flat. With utilisations at peak levels, supply side issues have come back to haunt Patni. Attrition went up to 17.7 per cent. Net additions in the quarter remained flat as high attrition took its toll on delivery resources. Guidance of $172 million (at the upper end) for the next quarter has been conservative due to supply side delivery issues. The management quantified new deal size as $175 million of contracted revenue with additional $50-75 million of third party business. Patni will be administering the health insurance policies from origination to closure. The stock is currently valued at 12.4x CY10E (calendar year 2010-estimated) earnings per share. Maintain buy.
— Elara Capital
