ABB
Reco Price: Rs 848,
Target Price: NA
The management expects improvement in performance of the power division, which has been reporting subdued profitability since past few quarters, post Q4CY10. Margins are, however, expected to improve in CY11. After a weak CY09 traction has improved in ABB’s automation projects. Automation orders are likely to post decent growth in CY10, making up for the base orders, although large value deals are still missing. ABB has increased its focus on the products business and expects to see better traction in overall volumes in power and automation products, supported well by new plants. While Edelweiss is optimistic on ABB’s overall long-term business growth, given its strong product profile, client base, strong balance sheet and new management with global experience, it feels current valuations largely capture near term positives. Maintain ‘hold/sector underperformer’
—Edelweiss Securities
Mphasis
Reco Price: Rs 561,
Target Price: Rs 630
Mphasis Q4FY11 revenues were at Rs 1,345 crore (up 5.2 per cent QoQ), helped by higher than expected hedging gains of Rs 27 crore. US dollar revenues were up 7 per cent sequentially to $ 290 mn . Ebitda margins declined 90 bps QoQ to 23.8 per cent. Net Profits at Rs 284 crore ( up 4.9 per cent QoQ) were higher despite lower operating profits helped by higher forex gains ( at Rs 13 crore) and lower taxes (at 9.5 per cent ). Company’s operating metrics indicates that majority of all the revenue addition has been driven primarily by recovery of revenues fore gone in an Asia Pac telco a/c. Pricing was flat across segments, overall headcount flat QoQ due to BPO reduction. Maintain hold .
—Emkay Global
BASF
Reco Price: Rs 648,
Target Price: Rs 712
BASF India’s stand-alone Q2FY2011 net profit came in at Rs45.6 crore, up 34 per cent year on year (YoY). The Q2FY2011 results however are not strictly comparable with those of Q2FY2010, as the quarter under review includes the financials of the merged Ciba India. The total income for the quarter was up by 78.8 per cent YoY to Rs 658.6 crore, driven by a 1.2 times YoY rise in the revenue from the performance products business. The robust growth in the performance products business was largely due to the merger with Ciba India. The agricultural solutions business also logged in a good show with the revenue up by 55 per cent YoY. The operating profit margin was down 300-basis-point at 11.9 per cent due to the amalgamation with Ciba India and lower margins of the agricultural solutions business.Maintain Hold .
—Sharekhan
Bombay Rayons
Reco Price: Rs 217,
Target Price: Rs 234
Bombay Rayon Fashions’ (BRFL’s) net sales grew by 35.4 per cent YoY to Rs523 crores. Fabric and garments volume grew by 91.2 per cent and 11.2 per cent YoY respectively. Increased prices of raw material as well as finished goods during the quarter helped BRFL to improve its profitability as it was carrying low cost inventories. Further, the company’s other expenses/sales ratio came down by 383bps to 8.6 per cent on QoQ basis, improving EBITDA margins by 284 bps to 28.3 per cent (up 453bps YoY). Interest cost has gone up by 48.1 per cent YoY to Rs 33 crores due to increased debt. Adjusted PAT grew by 51.6 per cebt YoY to Rs62 crores. Brokerages have downgraded their FY11E and FY12E earnings estimate considering delay in capacity ramp up, higher interest burden and further equity dilution. Downgrading from ‘BUY’ to ‘Accumulate’.
—Prabhudas Lilladher
