INDIAN HOTELS Higher expenditure drags operating margin |
Indian Hotels Company, owners of the Taj group of hotels, reported a 48.61 per cent increase in net profit to Rs 16.60 crore for the quarter on the back of increased other income (Rs 4.44 crore), and a substantial reduction in interest cost. |
Reduction in interest expense was due to swaps, lower interest rates and interest on tax refund pertaining to earlier years. The improved sentiment in the tourism sector helped the company post a 13 per cent rise in total income to Rs 192.20 crore. |
However, the company's operating margin was down to 11.11 per cent from 12.12 per cent, largely due to higher salary expenditure part of which is one-time in nature.
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According to the company, future growth would be driven by a rise in ARR. At Rs 449.50, the Indian Hotels scrip trades a P/E of 42x on trailing 12-month EPS. With boom times expected for Indian tourism industry, the scrip is considered a good long-term prospect by analysts. |
BHARTI TELE Mobile business lifts operating profit |
Bharti Tele-Ventures pulled an impressive act with excellent third-quarter results on the back of its mobile business. The company posted a net profit growth of 72.88 per cent sequentially at Rs 161.30 crore in the third quarter. |
The company's operating profits grew 25.57 per cent as margins saw a substantial improvement to 37.26 per cent from 32.90 per cent. |
The mobile business was the key driver for growth with customer base growing 19 per cent and the division contributing 67 per cent to operating profit (63 per cent in the last quarter).
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The stage seems to be set for Bharti to surge ahead, with the unified licensing regime coming in. Also, price cuts in handsets and availability of lower-priced pre-paid cards will provide enough boost for the company to flourish. |
One major concern is Reliance Infocomm offering pre-paid connections. Analysts expect earnings per share of Rs 2 for FY04 and Rs 4 for FY05. The stock is currently at levels of Rs 126 with a trailing 12-month P/E multiple of 56.9. |
TATA POWER Reduction in fuel costs, interest charges enhance net |
Net profits of Tata Power recorded an increase of 26.39 per cent to Rs 184.49 crore in the third quarter, powered by a reduction in fuel costs and interest charges. |
Sales realisations, however, dropped 10.49 per cent to Rs 1027.45 crore as a result of a change in fuel mix (which is a pass-through) combined with a lower offtake from the Mumbai region.
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Analysts are concerned about the company's performance going forward since it faces stiff competition from BSES. BSES is also more likely to get the Delhi area which will impact Tata Power. |
"We expect earnings per share of Rs 27 for FY04 and Rs 29 for FY05," says a power analyst with a domestic research house. The stock currently trades at a 12-month P/E multiple of 12.45 and the stock price stands at levels of Rs 384. |
GRASIM INDUSTRIES Surge in sponge iron business boosts results |
Grasim Industries posted a 23.14 per cent jump in net profit at Rs 163.72 crore for the quarter. Net sales grew 14.47 per cent to Rs 1,335.40 crore for the quarter. A surge in the company's sponge iron business was mainly responsible for the impressive performance.
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Grasim's ongoing business restructuring and cost reduction processes are expected to lead to better operational efficiency in the future, say analysts. At Rs 1,126.95, the scrip trades at a P/E of 21.48 on a trailing 12-month EPS. |
TATA STEEL Rise in prices enhances performance |
Tata Steel reported a 60.64 per cent increase in net profit to Rs 447.17 crore. Net sales moved up by 18.95 per cent to Rs 2,632.03 crore. The good performance comes on the back of a sharp rise in steel prices in 2003, an increase in other income and a drop in interest cost.
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According to analysts, improved realisations, a better product mix and continued cost controls have been primarily responsible for the good performance of the company. |
With demand expected to pick up on the back of a boom in construction activity as well as an upturn in the auto, consumer durables and auto ancillary sectors, the company is likely to benefit from the strong volume growth and higher prices. The scrip, which trades at Rs 425.75 - a P/E of 10x on a trailing 12-month EPS - is attractive at current levels, say analysts. |
SATYAM COMPUTERS Lower forex gains, salary hikes hit operating margin |
Satyam Computers reported a double-digit sequential growth in revenues for the first time in 11 quarters, beating analysts' expectations that its revenue growth would be below Infosys and Wipro. |
In the quarter, revenues grew 10.7 per cent sequentially to Rs 662.7 crore, thanks to a 12.1 per cent jump in volumes. |
However, the company's net profit declined marginally to Rs 145.9 crore on a sequential basis on the twin impact of lower forex gains and salary hikes, which impacted operating margins.
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The company raised its full-year earnings per share (EPS) forecast to Rs 17.77- 17.84. It expects its income from software services this fiscal at Rs 2511-2521 crore. |
Meanwhile, for the fourth quarter, the company expects an EPS of Rs 4.58-4.65 and income from software operations at Rs 690-700 crore. Satyam trades at Rs 341.30 on the BSE at around 15 times FY05 estimates. |
"Going forward, the improved performance is expected to continue and I would put an EPS target of 22.2 for FY05," says R Ravi, analyst at IDBI Capital. |
RANBAXY Fall in Cefuroxim axetil sales hits profits |
Ranbaxy Laboratories, India's largest drug company, reported a 52.06 per cent drop in fourth-quarter net profit to Rs 102 crore in 2003 from Rs 212.70 crore in 2002. |
Fourth-quarter sales fell 3.93 per cent to Rs 745.90 crore from Rs 776.40 crore. The fall in profit was mainly attributed to the decline in sales of top-selling Cefuroxim axetil. |
However, a 52.98 per cent rise in other income (mainly by way of a share of the $6-million payment received in the fourth quarter of 2003 from Bayer for ciprofloxacin) limited the fall in net profits.
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The company is planning to confront the fall in revenues by introducing new products in 2004, with the sales growth expected to be in the region of 17-20 per cent. At Rs 1030 levels, the scrip trades at a P/E of 21x on a 12-month trailing EPS. It is still worth a look, say analysts. |
TATA MOTORS Impressive sales growth |
The automobile major posted impressive third-quarter results on the back of superb sales growth. Sales of vehicles (excluding exports and net of excise) increased by 54.88 per cent to Rs 3398.26 crore in the third quarter. |
Exports as a percentage of sales increased from 3.5 per cent to 9.4 per cent and revenues from the same grew to Rs 320.10 crore ($70.65 million). Net profits, too, rose 178.54 per cent to Rs 210.88 crore in the third quarter.
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The company has completed its due-diligence of Daewoo Motors in Korea and the acquisition is expected to happen in the next few months. |
This will increase the capacity of Tata Motors by an additional 20,000 (current capacity - 200,000). Analysts expect further volume growth in vehicles with economic conditions getting better (40 per cent in FY04). |
The stock currently trades at a P/E ratio of 20.34 at price levels of Rs 416. "We expect an EPS of Rs 22 for FY04 and Rs 30.5 for FY05," says an auto analyst with a domestic brokerage. |
WIPRO IT services, BPO buoy revenues |
Wipro reported impressive results wherein revenues grew 15.7 per cent sequentially to Rs 1562.14 crore, buoyed by a 11 per cent sequential rise in the IT services business and a 29 per cent jump in the BPO business. The company's net profit witnessed a sequential gain of 16.10 per cent to Rs 266.33 crore.
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Analysts expect Wipro's margins to improve in the fourth quarter. "Acquisition losses will go down and manpower utilisation will reach 73 per cent level," says an analyst with a leading brokerage. The stock trades at Rs 1719.95 on the BSE at 57x FY05 estimates. |
"The outlook for Wipro seems to be positive on the back of a strong order book and rising client list and the EPS target for FY05 would be around 56. As far as the stock price is concerned, it does look a bit expensive, but the improving fundamentals in the Indian and US economy would work in its favour," he adds. |