Rajasthan Spinning: Good quarterly show

ANALYSTS' CORNER

Emkay Research maintains its "accumulate" rating on Rajasthan Spinning. The report states that the company posted better-than"�expected quarterly results.

For instance, net sales were Rs 284 crore, as against estimates of Rs 245 crore and net profit was Rs 13.8 crore, as against the estimated Rs 11 crore.

Margins for the quarter were higher at 11.4 per cent as against 9 per cent for the first nine months of FY06 on account of rationalisation in duty structure and higher demand for yarn. Margins could have been higher but for losses from the garment business.

Optimal utilisation of capacities, pick up in the garmenting and strong yarn demand are expected to support revenue and earnings growth in FY07 as well. The report expects turnover to be higher by 14 per cent to Rs 1,092 crore and net profit to be higher by 31 per cent to Rs 35.4 crore.

Gujarat Sidhee Cement: Looking ahead

India Infoline, initiating coverage on Gujarat Sidhee Cement, recommends a "buy". The report states that the company can expect better days ahead. This is based on the strong turnaround by the company in the past three quarters and firm cement prices.

The report believes that the company has started showing good improvement in operations.

With cement prices rising sharply in the past three months and expected high pricing scenario going ahead, due to demand-supply mismatch, the company is expected to post good results for the next one to two years. The stock trades at P/E of 24x on FY06E earnings and 5x on FY07E earnings.

South Indian Bank: Expecting more

Anand Rathi Securities recommends a "buy" on South Indian Bank. The report states that the bank has shown consistency in its operating performance in the current year also, with the net interest income growing by 20.7 per cent to Rs 310 crore over and above the 28 per cent growth witnessed in the previous year.

Net profit has risen almost five times (485 per cent) as against a fall witnessed in the previous year. Weighted EPS has increased to Rs 10.25, while EPS on expanded equity works out to Rs 7.23.

The bank has been able to significantly bring down its NPAs from 2.5 per cent in the previous year to 1.86 per cent, which has been the main drainer on the net profit last year and the management is confident of bringing down NPA levels to below 1 per cent levels in FY07 and to zero per cent levels in FY08.

Also with provisioning relating to treasury operations already accounted for in the current year and no leftover in terms of provisioning for VRS scheme, the after asset related provisioning items in the current year would be down to minimum levels, thus boosting profits in the current year.