GODREJ CONSUMER PRODUCTS
Reco price/date: Rs 836/May 2;
Current/target price: Rs 839/Rs 737
Godrej Consumer Products posted better sales performance. However, profitability continued to be under pressure due to higher marketing initiatives and a minimum wage hike (in Indonesia), loss of manufacturing days and restructuring (in Africa). Though Africa operations is expected to witness profitability improvement in the coming quarters, the increase in staff cost in Indonesia would impact profitability during the next three quarters of FY14. Additionally, profitability in the Latin American operations could continue to be under pressure as the impact of issues like tougher regulatory norms on imports, capital flows, high on-ground inflation in Argentina and hyper competitive activity would be gradually absorbed. Valuations appear rich. Downgrade to Sell from Hold.
- Antique Stock Broking
PETRONET LNG
Reco price/date: Rs 140/May 2;
Current/target price: Rs 139/Rs 195
Petronet LNG's Q4FY13 net profit was 12 per cent lower than Bloomberg consensus estimates. The sharp decline in regas volumes was a negative surprise, as LNG demand was subdued owing to a sharp increase in LNG prices and seasonally weak demand from the power/fertiliser sector. Marketing margins were a positive surprise but rising competition could add downside pressure. Although the delay in the pipeline poses a risk to the near-term utilisation of the Kochi terminal, analysts expect the company to enjoy strong volume growth, thanks to its capacity expansion and continued monopolistic position. The stock is trading at reasonable valuations of 10.6 times FY14 estimated earnings. Maintain Buy.
- Ambit capital
TAJ GVK HOTELS
Reco price/date: Rs 63/May 2;
Current/target price: Rs 63/Rs 69
Taj GVK Hotels recorded muted topline growth in Q4FY13 at Rs 64.3 crore (down 0.1 per cent YoY). This was due to poor demand, along with higher room inventory in Hyderabad. In addition, its profitability was also impacted by a fuel surcharge demand of Rs 1.7 crore (exceptionals), raised by the central power distribution company. Operating cost remained lower by 2.4 per cent YoY. Margins also declined 602 basis points due to poor sales. Maintain Hold.
- ICICI Securities
