Punjab National Bank
22/10/2014 Result Updates
Punjab National Bank (PNB) reported a weak set of numbers for 2QFY2015 with net interest income (NII) growth of 3.4% yoy, weighed down by a charge of Rs294cr on account of the funded interest term loan (FITL; on restructured loan). Higher slippages during the quarter deteriorated the asset quality of the bank. The tax rate was higher at 48.1% in 2QFY2015 as compared to 20.5% in 2QFY2014, which affected the earnings. PNBs 2QFY2015 results were below expectations, mainly on account of continued asset quality woes. Going forward, as the economy improves and asset quality gets better, the bank would likely report better numbers. At the current market price, the stock trades at 0.8x FY2016E ABV. We recommend a Buy rating on the stock.
   Exide Industries Ltd
22/10/2014 Result Updates
Exide Industries Ltd (EIL)s 2QFY2015 results have come in below our estimates, as the company disappointed on the margin front despite double digit revenue growth. EIL is likely to register a double digit top-line growth over FY2014-16, driven by robust automotive replacement demand, strong industrial segment due to improved economic outlook and recovery in the automotive OEM demand. Further, EIL is focusing on margin improvement by undertaking price hikes in the inverter segment, reducing dealer incentives and raw material cost control by improving the product quality. We have broadly retained our earnings assumptions for FY2015/16. We maintain our Accumulate rating on the stock with a price target of Rs170 (based on 18x FY2016 core business EPS of Rs8.5 and Rs17/share stake in the life insurance business).
   UPL Ltd
22/10/2014 Result Updates
United Phosphorus Ltd (UPL) posted a good set of numbers for 2QFY2015. For the quarter, the company posted sales of Rs2,618cr V/s Rs2,269cr in 2QFY2014, registering a yoy growth of 15.4%. The OPM for the quarter stood at 16.7% V/s 16.0% in 2QFY2014, mainly driven by a higher GPM of 50.5% (V/s 48.7% in 2QFY2014). The expansion in the OPM was lower than the expansion in the GPM owing to the 24.4% rise in other expenditure. This along with a lower other income, which dipped by 32.2% yoy, led the Adj. net profit to come in at Rs178cr V/s Rs171cr in 2QFY2014, ie a yoy growth of 4.5%. We maintain our Buy recommendation on the stock with a target price of Rs424.
   Indoco Remedies Ltd
22/10/2014 Result Updates
For 2QFY2015, Indoco Remedies (Indoco) posted results much below our expectations on the net sales and profit fronts. Sales came in at Rs226cr (V/s an expected Rs257cr), posting a yoy growth of 16.1%. The sales growth was mainly driven by exports, which grew 21.1% yoy, while domestic sales grew by 13.3% yoy. On the operating front, the gross margin came in at 64.8% V/s 61.2% in 2QFY2014, consequently taking the operating margins to 20.6% V/s 13.2% in 2QFY2014. However, a 148.3% yoy rise in the tax expense weighed down the net profit, which came in at Rs22cr (V/s an expected Rs30cr), posting a yoy growth of 39.7%. We maintain our Neutral rating on the stock, taking into consideration the stocks valuation.
   Alembic Pharmaceuticals Ltd
21/10/2014 Result Updates
For 2QFY2015, Alembic Pharmaceuticals (Alembic Pharma)’ sales and profit came in below our expectations. The sales and net profit came in at Rs539cr (V/s an expected Rs568cr) and Rs84cr (V/s an expected Rs88cr), posting a yoy growth of 11.7% yoy and 31.7%, respectively. On the operating front, the gross margin came in at 64.8% V/s 60.7% in 2QFY2014; consequently taking the operating margin to 21.2% V/s 19.6% in 2QFY2014. This, along with lower interest expenditure, which dipped by 31.9% yoy, aided the PAT to come in at Rs84.1cr V/s Rs63.8cr in 2QFY2014, ie a growth of 31.7% yoy. We maintain our Neutral rating on the stock.
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