SIEMENS INDIA
Reco price: Rs 750;
Target price: Rs 635
Siemens India seems to be facing a series of challenges, as the ordering environment becomes challenging (H1 FY12 order inflow down 36 per cent), margin pressures intensify (margins at Lehman crisis level) and balance sheet concerns rise (sticky receivables at a decade-high level). Moreover, Asian competition in the T&D space is also showing signs of resurfacing. The FY13 estimated price/earnings of 28 times seems to be overlooking these challenges. Deutsche Bank has cut its earnings estimates by 15-18 per cent over FY12-13, led by a 32 per cent cut in order inflow and a 7-17 per cent sales forecast cut. Downgraded to Sell.
Deutsche Bank Markets Research
BANK OF BARODA
Reco price: Rs 687;
Target price: Rs 825
Despite net profit (up 17 per cent y-o-y) beat, Bank of Baroda (BoB) reported operationally weak result on a spurt in restructured assets (to 6.5 per cent of loans), rise in credit cost, greater-than-expected rise in employee expense (up 51 per cent sequentially). Domestic NIM fell seven basis points sequentially on 30 basis points fall in yield on advances due to a Rs 130-crore reversal of interest. Loan and deposit growth at 26 per cent y-o-y remained well ahead of industry growth. Analysts have cut their FY13 earnings estimates by seven per cent due to higher operating expenses. Asset quality weakened on large restructuring of Rs 5,100 crore (including SEBs and Air India). However, as BoB’s gross NPA is lower and coverage ratio superior at 80 per cent, erosion in adjusted book value is lower at 11 per cent versus peers (15-20 per cent). Analysts’ FY13 adjusted book value is lower by four per cent. Outperform.
Credit Suisse
GODREJ PROPERTIES
Reco price: Rs 587;
Target price: Rs 460
Godrej Properties Ltd reported 25 per cent y-o-y decline in net profit in FY12, below IIFL’s estimates. Balance sheet size more than doubled over the same period resulting in reported RoE reducing from 15 per cent in FY11 to eight per cent in FY12. Reported Ebitda for FY12 was lower than cash interest costs. Attributable sales volume declined 31 per cent y-o-y to 2.2 million sq ft. Sales to the Godrej group companies contributed 47 per cent of headline sales booking in Q4 FY12. Maintain Sell.
IIFL
