Centrum Broking stock recommendations on 4th Nov
Centrum Broking Pvt. Ltd released its daily stock recommendations on Tuesday 4th November. Please find attached the detailed research report for the same.
IPCA Labs – Excellent quarter, robust results
Tata Motors – Overdone JLR concerns render valuations attractive
Bharti Airtel – Inline with expectations; outlook remains buoyant
IPCA Labs
Current Price – Rs 386
Target Price – Rs 803
Ipca Labs’ Q2FY09 results were well above our estimates. Revenues grew at a robust 21.4% YoY to Rs3.48bn, inline with our estimate of Rs3.53bn, driven by strong performance in both the domestic and exports business. EBITDA margin improved 410bp YoY to 23.9%, significantly higher than our estimate of 20.9%, mainly on lower raw material cost. The company reported foreign exchange translation loss of Rs236mn during the quarter on account of US dollar appreciation for foreign currency debt against a gain of Rs158mn inQ2FY08. Reported PAT declined due to the forex loss. However, adjusted net profit (adjusting translation loss and gain as these are unrealised) increased 68.3% YoY to Rs562mn, well above our estimate of Rs469mn.
Tata Motors
Current Price – Rs 170
Tata Motors (TML) standalone Q2FY09 results disappointed with a loss of Rs118mn. Its Rs3.58bn profit from sale of Tata Steel shares helped cover the loss. Net sales at Rs70.79bn (our estimate: Rs67.59bn) rose 6.1% YoY despite a 1.2% decline in volumes to 133,952 vehicles. EBITDA margin, now expressed excluding the forex losses plunged 378bp YoY to 8.1%. TML hardly provided for
any taxes, thereby reporting a PAT of Rs3.47bn, down 34.1% YoY. We have revised our estimates and upgraded the stock to Hold (from Sell), as we believe its current low valuations on JLR concerns is overdone and bereft of positives in its current Indian shore operations.
Bharti Airtel
Current Price – Rs 654
Bharti Airtel’s Q2FY09 results were inline with expectations. Revenue grew 6.3% QoQ and 42.3% YoY to Rs90.2bn. The growth was driven by robust operational performance of the company’s mobile services segment which registered a 5.3% QoQ and 44.0% YoY growth in revenue to Rs72.8bn. Mobile subs base grew 11.7% QoQ and 58.5% YoY to 77.5mn. Revenue growth in mobile services was contained due to the decline in ARPU by 5.3% QoQ and 9.5% YoY to Rs331. The quarter also witnessed a slight 1.6% QoQ decline in MoU to 526, which is primarily due to seasonality factor and we expect that MoU would recover in coming quarters.
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