Shree Cement
Reco price/date: Rs 4,414/April 30;
Current price/target price: Rs 4,490.45/Rs 5,070
We expect Shree Cement's profitability to benefit from (1) its cost leadership (the lowest in the industry), (2) benign fuel cost expectations for the industry as a whole, and (3) Shree Cement's industry-leading 10 per cent plus cement volume growth during FY14-15E driven by its expansion of Unit 9 and 10 (total of four million tonnes). We estimate the company to see earnings before interest, taxes, depreciation and amortisation (Ebitda) increase 17 per cent at a compounded annual growth rate during FY12-15E period.
-Karvy Stock broking
Hexaware Technologies
Reco price: Rs 83/April 29;
Current price/target price: Rs 81.95/Rs 128
Hexaware's Q1CY13 revenue at $94.1 million, sequential growth of 1.8 per cent , was in line with Street estimate of $94.4 million while Ebitda margin at 19.3 per cent surpassed the 18.3 per cent estimate. Though growth during the quarter was on anticipated lines, Q2CY13 revenue guidance of $94-96 million, implying sequential growth of zero to two per cent is disappointing. Management expects growth to be back ended and estimates margin to expand further in Q2CY13. We believe a weak H1CY13 precludes the possibility of double digit growth in CY13. Based on a lower Q2CY13 guidance, we are lowering our CY13 revenue growth assumption to 8.5 per cent from 13.8 per cent earlier. Maintain 'Buy'.
-Edelweiss Securities Ltd
Hero MotoCorp
Reco price/date: Rs 1,597/April 29;
Current price/target price: Rs 1,645.10/Rs 1,644
Hero MotoCorp's (HMCL) Q4FY13 results were above our as well as consensus estimates. Ebitda margins improved 120basis points (bps) quarter-on-quarter (q-o-q) to 13.8 per cent despite a three per cent q-o-q decline in volumes, mainly driven by savings on the raw material front (gross margins improved 190 bps q-o-q). As a result, Ebitda decline was restricted at 8.2 per cent year-on-year (y-o-y) to Rs 850 crore (ahead of our estimate of Rs 750 crore ). With slowdown in the two-wheeler sector evident and competitive intensity increasing, we maintain our negative stance on the two-wheeler space. Given the strong growth expected from HMSI (30 per cent in FY14E), we expect HMCL to lose 120 bps-130 bps in market share in FY14E in the motorcycle segment. We reiterate our reduce call on the stock on account of increased competition from HMSI and fair valuation at 14.2x FY14E EPS and 11.4x FY15E earnings per share. Maintain reduce.
-Prabhudas Lilladher
SIEMENS
Reco price/date: Rs 534/April 29;
Current price/target price: Rs 545.90/Rs 417
Siemens posted weak operational results for 2QFY13, marred by slowdown in execution and mounting pressure on profitability. Revenue fell 26.4per cent y-o-y to Rs 2,960 crore, 15.7 per cent/17.6 per cent below our / Bloomberg consensus estimates, respectively. Delay in customers' project offtake, rising costs and provision for cost overrun (Rs 90.7 crore in 2QFY13) led to an 86.2 per cent y-o-y decline in Ebitda at Rs 75.3 crore. Profitability was also affected by losses due to commodity price volatility (Rs 50 crore in H1FY13) and forex volatility (Rs 20 crore in H1FY13). Consequently, profit after tax fell 90 per cent to Rs 29.9 crore, 81 per cent / 83 per cent below our / Bloomberg consensus estimates, respectively, despite tax write-back of Rs 11.5 crore. Factoring the same, we have cut our earnings estimates by 30.8 per cent / 11.7 per cent for FY13E/FY14E, respectively. Retain 'Sell'.
-Nirmal Bang
