Abbott India Ltd
22/11/2014 Result Updates
For 2QFY2015, Abbott India (AIL) reported a good set of results. Its top-line grew by 28.9% yoy to Rs589cr. Although the raw material cost as a percentage of sales increased marginally by 47bp yoy to 58%, the employee and other expenses as a percentage of sales declined by 49bp yoy and 59bp yoy to 12.9% and 14.1% respectively. As a result, the EBITDA margin witnessed a slight improvement of 61bp yoy to 14.9%. Owing to higher top-line and better margins, the net profit during the period grew by 41% yoy to Rs64cr. On the back of good performance by its major brands and continuous new launches, we expect the companys top-line and profit to improve to Rs2,781cr and Rs303cr respectively in FY2016E. At the current market price, the stock is trading at 23.9x PE for FY2016E which we believe is undervalued compared to its multinational pharma peers Sanofi and GlaxoSmithKline Pharma trading at 28.2x and 48.8x respectively. We have an Accumulate recommendation on the stock with a target price of Rs3,711 based on a target PE of 26x for FY2016E.
   State Bank of India
19/11/2014 Result Updates
For 2QFY2015, State Bank of India (SBI) reported a PAT growth of 30.5% yoy to Rs3,100.4cr, mainly on account of 14.9% yoy growth in operating income and lower opex growth of 2.2% yoy. SBIs Asset quality has been improving since the last three quarters. With expectation of improvement on economic growth, asset quality woes would reduce, which is expected to improve return ratios. The banks core strength has been its high CASA and fee income, which has supported its core profitability in challenging times. Its strong capital adequacy also provides comfort. In our view, its current valuation of 1.3x FY2016E ABV, after adjusting for subsidiaries, factors in the positives for the bank. We recommend an Accumulate rating on the stock.
   Visaka Industries Ltd
18/11/2014 Result Updates
Visaka Industries (VIL) is engaged in two businesses – building products (cement asbestos products and fibre cement flat products like V-boards and V-panels) and synthetic yarn. It has an installed capacity of 7,52,000MT of cement asbestos products with a strong network of 6000 plus stockists / dealers across India. In the synthetic yarn segment it has an installed capacity of 31 MTS M/CS. With consumer and business confidence improving in building products segment and sustainable performance of its synthetic yarn segment, we expect the company to post a strong performance going ahead. The companys depreciation cost is expected to increase sharply in FY2015 due to changes made in the Companys Act 2013 which lays down the new rates for depreciation of fixed assets. However, in FY2016E, the depreciation cost is expected to decline by ~30% yoy which will significantly boost profits. We expect the net profit to grow at a CAGR of 81% over FY2014-16E to Rs39cr. At the current price of Rs123, the stock is trading at a valuation of 5x FY2016E EPS, which we believe is attractive. We initiate coverage on VIL with a Buy rating and a target price of Rs174, valuing the stock at 7x on FY2016E earnings.
   Eicher Motors Ltd
18/11/2014 Result Updates
Eicher Motors Ltd (EML)s 3QCY2014 results were in line with our estimates on the operating front; however lower other income and higher taxation led to lower than expected profits. The demand for Royal Enfield is likely to remain strong over the next two to three years given the increasing acceptance of leisure biking trend where it has a strong brand image. The demand continues to outstrip supply and EML is constantly ramping up capacity. Further, Royal Enfield is likely to sustain higher margins on back of strong pricing power and benefits of operating leverage. Further, the commercial vehicle segments profitability would also improve given the uptrend in the commercial vehicle industry and gradual reduction of discounting. EML is likely to witness a robust 61% CAGR in earnings over CY2014-2016, which would be amongst the highest in our automobile universe. EML is one of our preferred mid-cap picks given the robust earnings potential. We assign an Accumulate rating on the stock with a price target of Rs15,654 (based on 15x CY2016 EV/EBIDTA).
   Stock Holding Disclosure list as on November 15, 2014
17/11/2014 Disclosure
The list includes the stock position of Angel Broking and its Affiliates and/or its Analysts as on November 15, 2014. The stock holding position is pertaining to companies under the coverage of Analysts employed by Angel Broking and its Affiliates.
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