STOCK UPDATE
Bank of Baroda
Cluster: Apple Green
Recommendation: Buy
Price target: Rs802
Current market price: Rs734
Q1FY2011 results: First-cut analysis
Result highlights
Bank of Baroda reported a bottom line of Rs859.16 crore in Q1FY2011, up 25.4% year on year (yoy), versus our estimate of Rs794 crore, supported by a strong growth in the net interest income (NII). The asset quality deteriorated on a sequential basis due to slippages from the small and medium enterprise (SME) and agri portfolio.
The NII for the quarter was up a robust 54.2% yoy to Rs1,858 crore, driven by a strong 30.7% year-on-year (y-o-y) growth in the advances. Meanwhile the calculated net interest margin (NIM) deteriorated by 6 basis points sequentially led by a contraction in yields.
The non-interest income came down 12.2% yoy to Rs617.2 crore despite a healthy growth in core fee income due to a y-o-y decline in the banks? treasury income.
The operating expenses were up by 5.5% yoy led by a 22.1% y-o-y increase in other operating expenses. Meanwhile staff expenses contracted by 2.9% yoy. The cost-to-income ratio improved by 878 basis points yoy to 38.3%.
The business growth remained very strong with deposits and advances growing by 28.2% and 30.7% yoy respectively. The advances growth was led by the SME segment which grew 42.7% yoy. The domestic current account and saving account (CASA) ratio of the bank stood at a healthy 35.23%, largely in line with that of the year ago quarter.
The provisions for the quarter stood at Rs251.3 crore vs a write-back of Rs39 crore in the year ago quarter.
The asset quality of the bank deteriorated in the quarter, as gross non-performing asset (GNPA) increased 10.7% sequentially to Rs2,657.4 crore. The GNPA on relative basis (%GNPA) increased 5 basis points sequentially to 1.41%. The deterioration in asset quality was largely due to slippages from the banks? SME and agri portfolio. The provisioning coverage as at the end of Q1FY2011 stood at 73%.
The total restructured assets stood at Rs5,283.4 crore, (~2.8% of advances), of which Rs476 crore (~9% of total restructured assets) have slipped into NPA category so far.
The bank, as on June 30, 2010, remains adequately capitalised with its capital adequacy ratio (CAR) at 13.25% (as per Basel II norms) with tier I CAR at 8.16%. The bank raised upper tier II capital of Rs1,000 crore during the quarter.
At the current market price of Rs734, the stock trades at 16.7x FY2012E earnings per share (EPS), 4x FY2012E pre-provisioning profit (PPP) per share and 1.4x FY2012E adjusted book value (ABV) per share. We will revert with a detailed analysis of the banks Q1FY2011 performance.
Friday 30 July 2010
Wednesday 28 July 2010
Punjab National Bank
HDFC Securities has recommended buy rating on Punjab National Bank with a target of Rs 1148 in its July 28, 2010 research report
The bank has reported decent numbers in Q1FY11 amongst the other public sector banks. The asset quality of the bank though came
down in Q1FY11 is still at healthy levels with Net NPA% at 0.66% of the net advances. This is still one of the healthiest asset qualities
in the industry. PNB managed to grow its Net Interest Margin in Q4FY10 to 3.94%. This is one of the highest in the industry.
HDFC Securities has recommended buy rating on Punjab National Bank with a target of Rs 1148 in its July 28, 2010 research report
PNB offers one of the best investment profiles due to its strong liability franchise, good earnings visibility, healthy asset quality, strong
CASA ratio, adequate provisioning and reasonably healthy CAR. PNB could also benefit out of the rural thrust of the government as
three fifth of its branches are in the farm rich belt of Punjab, Haryana and Rajasthan. It also has a strong presence in the Indo Gangetic
plains, which helps the bank lend more to the MSME sector. Aggressive lending during the credit crunch period has resulted in increase in the restructured assets.
In our Q4FY10 result update on PNB dated May 11, 2010, we had mentioned that the stock could in the Rs.899 (1.45x FY11 (E) Adj.
BV) to Rs.1054 (1.70x FY11(E) Adj. BV) band over the next quarter. Post the report; the stock achieved a high of Rs 1103.75 on 5th
July 2010 and a low of Rs 933.10 on 26th May 2010.
We are keeping our FY11 estimates unchanged at the moment, though there is a good chance that the bank could report higher net
interest income and net profit than our estimates. We feel that the bank, which is currently trading at 1.67x FY11E Adj. BV, could trade
in the range of Rs 960 (1.55x FY11E Adj. BV) and Rs 1148 (1.85x FY11E Adj. BV) over the next quarter.
The bank has reported decent numbers in Q1FY11 amongst the other public sector banks. The asset quality of the bank though came
down in Q1FY11 is still at healthy levels with Net NPA% at 0.66% of the net advances. This is still one of the healthiest asset qualities
in the industry. PNB managed to grow its Net Interest Margin in Q4FY10 to 3.94%. This is one of the highest in the industry.
HDFC Securities has recommended buy rating on Punjab National Bank with a target of Rs 1148 in its July 28, 2010 research report
PNB offers one of the best investment profiles due to its strong liability franchise, good earnings visibility, healthy asset quality, strong
CASA ratio, adequate provisioning and reasonably healthy CAR. PNB could also benefit out of the rural thrust of the government as
three fifth of its branches are in the farm rich belt of Punjab, Haryana and Rajasthan. It also has a strong presence in the Indo Gangetic
plains, which helps the bank lend more to the MSME sector. Aggressive lending during the credit crunch period has resulted in increase in the restructured assets.
In our Q4FY10 result update on PNB dated May 11, 2010, we had mentioned that the stock could in the Rs.899 (1.45x FY11 (E) Adj.
BV) to Rs.1054 (1.70x FY11(E) Adj. BV) band over the next quarter. Post the report; the stock achieved a high of Rs 1103.75 on 5th
July 2010 and a low of Rs 933.10 on 26th May 2010.
We are keeping our FY11 estimates unchanged at the moment, though there is a good chance that the bank could report higher net
interest income and net profit than our estimates. We feel that the bank, which is currently trading at 1.67x FY11E Adj. BV, could trade
in the range of Rs 960 (1.55x FY11E Adj. BV) and Rs 1148 (1.85x FY11E Adj. BV) over the next quarter.
Jaiprakash Associates
ICICI Direct has recommended buy rating on Jaiprakash Associates with a target of Rs 151 in its July 27, 2010 research report.
At the CMP, the stock is trading at 23.5x FY12 earning estimates and 2.7x FY12 P/BV. We have downgraded our earnings estimates and expect the stock to remain range bound in the near term due to volatility in the construction division margin, higher interest & depreciation expenses.
However, we see significant value over the medium term in the stock. We continue to value the stock using the SOTP methodology and value it at Rs 151 per share. We have valued the company’s cement division at an implied EV/ tonne of US$103 per tonne, construction business at 6x FY12 EV/EBITDA, power division using FCFE methodology and Jaypee Infratech at a 20%discount to current market price. We maintain our STRONG BUY recommendation on the stock.
However, we see significant value over the medium term in the stock. We continue to value the stock using the SOTP methodology and value it at Rs 151 per share. We have valued the company’s cement division at an implied EV/ tonne of US$103 per tonne, construction business at 6x FY12 EV/EBITDA, power division using FCFE methodology and Jaypee Infratech at a 20%discount to current market price. We maintain our STRONG BUY recommendation on the stock.
Buy Sterlite Industries target Rs 228
Angel Broking has recommended buy rating on Sterlite Industries (India) with a target of Rs 228 in its July 26, 2010 research report.
“Sterlite is currently trading at 6.5x and 4.4x FY2011E and FY2012E EV/EBITDA, respectively. We have revised our FY2011E and FY2012E estimates to factor in lower metal prices at LME, lower sales volume estimates and other bookkeeping changes. We maintain a buy on the stock with a revised target price of Rs 228 (earlier Rs 245),” says Angel Broking research report.
“Sterlite is currently trading at 6.5x and 4.4x FY2011E and FY2012E EV/EBITDA, respectively. We have revised our FY2011E and FY2012E estimates to factor in lower metal prices at LME, lower sales volume estimates and other bookkeeping changes. We maintain a buy on the stock with a revised target price of Rs 228 (earlier Rs 245),” says Angel Broking research report.
GSK Pharmaceuticals
Emkay Share & Stock Brokers is bullish on GlaxoSmithKline Pharmaceuticals and has recommended buy rating on the stock, in its July 27, 2010 research report.
“GSK Pharma’s net sales for 2QCY10 grew 9% YoY to Rs4.98b (v/s our estimate of Rs5.2b) while adjusted PAT grew 6% YoY to Rs1.4b (v/s our estimate of Rs1.46b). Supply constraints resulted in lower vaccine sales, which in turn impacted topline growth. The management has indicated that the supply of vaccines has begun improving towards the end of June 2010. Domestic pharmaceutical revenues grew 12% YoY while overall sales (including exports) grew 9% YoY.”
“The stock deserves premium valuations due to strong parentage (giving access to large product pipeline), brand-building ability and likely positioning in post patent era. Based on lower than estimated 2QCY10 results, we have downgraded our EPS estimates. We now estimate EPS at Rs68 (up 14.2%) for CY10 and Rs78.2 (up 15%) for CY11. The stock trades at 30.2x CY10E and 26.3x CY11E earnings. Maintain Buy.”
“GSK Pharma’s net sales for 2QCY10 grew 9% YoY to Rs4.98b (v/s our estimate of Rs5.2b) while adjusted PAT grew 6% YoY to Rs1.4b (v/s our estimate of Rs1.46b). Supply constraints resulted in lower vaccine sales, which in turn impacted topline growth. The management has indicated that the supply of vaccines has begun improving towards the end of June 2010. Domestic pharmaceutical revenues grew 12% YoY while overall sales (including exports) grew 9% YoY.”
“The stock deserves premium valuations due to strong parentage (giving access to large product pipeline), brand-building ability and likely positioning in post patent era. Based on lower than estimated 2QCY10 results, we have downgraded our EPS estimates. We now estimate EPS at Rs68 (up 14.2%) for CY10 and Rs78.2 (up 15%) for CY11. The stock trades at 30.2x CY10E and 26.3x CY11E earnings. Maintain Buy.”
Tuesday 27 July 2010
NTPC
Emkay Global Financial Services has recommended accumulate rating on NTPC with a target of Ra 220 in its July 26, 2010 research report.
“NTPC’s Revenues grew by 8% yoy driven by flat volumes and 7.5% realization growth. Volumes flat due to Kahalgaon (2340MW) and Farakka (1600MW) operating at 61.5% and 73.7% PLF EBITDA/PAT declined by 8%/16% yoy mainly due to underrecovery of capacity charges of Kahalgaon & Farakka led by lower than target (85%) utilizations (might be forced outages) Forced outages most likely one time; more clarity in the analyst meet on 2nd august; to review earnings (Rs 11.2/12.8 in FY11E/12E) post analyst meet Valuations reasonable at 2.2xFY12E Book Value with core ROE of 28%, Maintain accumulate and price target of Rs 220,” says Emkay Global Financial Services research report.
“NTPC’s Revenues grew by 8% yoy driven by flat volumes and 7.5% realization growth. Volumes flat due to Kahalgaon (2340MW) and Farakka (1600MW) operating at 61.5% and 73.7% PLF EBITDA/PAT declined by 8%/16% yoy mainly due to underrecovery of capacity charges of Kahalgaon & Farakka led by lower than target (85%) utilizations (might be forced outages) Forced outages most likely one time; more clarity in the analyst meet on 2nd august; to review earnings (Rs 11.2/12.8 in FY11E/12E) post analyst meet Valuations reasonable at 2.2xFY12E Book Value with core ROE of 28%, Maintain accumulate and price target of Rs 220,” says Emkay Global Financial Services research report.
Engineers India FPO
The follow-on public offering from th government-run Engineers India (EIL) got a tepid response on the first day of the issue today with offer getting a paltry 1 per cent subscription.
The FPO, through which the government expects to raise up to Rs 977 crore, received bids of 4.2 lakh shares against 3.36 crore equities on offer, thus getting subscribed 1 per cent, as per the data available with the NSE.
Most of the bids came in from retail investors with 4 per cent of the overall portion reserved for them getting subscribed.
The state-run firm has came out with its further public offer of 3.36 crore equity shares of Rs 5 each in the price band of Rs 270-290 apiece.
The offer closes on July 29 for institutional buyers and on July 30 for others. Retail bidders will be given a discount of 5 per cent on the issue price.
Meanwhile, speaking to reporters in Bangalore, EIL Director for projects RK Grover said the company is looking at getting into city gas distribution. It would look at servicing, operations and stake holding, he said.
The government is selling 10 per cent stake through the FPO. At present, the government holds a little over 90 percent in the company.
The company, a leader in engineering consultancy, had an order book of Rs 6,236 crore as on March 31, 2010 and operates majorly in hydrocarbon sector, offering end-to-end solutions in engineering and design.
Meanwhile, in the secondary market, shares of EIL closed in red, despite a firm broader market. EIL ended at Rs 311.90, down by 1.53 per cent on the BSE, which rose 57 points to settle at 18,077.61.
ICICI Securities, IDFC Capital, SBI Capital Markets and HSBC Securities and Capital Markets India are the book running lead managers to the issue.
Monday 26 July 2010
RBI Credit Policy
Imperative to continue with normalization of rate and system is likely to remain in deficit mode making repo rate the benchmark, says RBI, reports NDTV Profit. Monetary policy works best when liquidity is being injected, it adds, reports the channel.
RBI narrows LAF Corridor to 125 bps versus 150 bps and raises projection for FY'11 GDP growth to 8.5% from 8%, reports NDTV Profit. Real policy rates are not consistent with strong growth and to contain inflation and prevent build-up of inflation pressures, says RBI, reports the channel.
RBI has raised Repo Rate to 5.75% from 5.5% and Reverse Repo Rate has been hiked to 4.5% from 4%, reports CNBC TV18. The Nifty is back in the green with the Sensex trading at 18060 up 40 points from its previous close, and Nifty is at 5428, up 9 points.
RBI hikes Repo Rate by 25 bps and Reverse Repo Rate by 50 bps while CRR remains unchanged at 6%.
RBI narrows LAF Corridor to 125 bps versus 150 bps and raises projection for FY'11 GDP growth to 8.5% from 8%, reports NDTV Profit. Real policy rates are not consistent with strong growth and to contain inflation and prevent build-up of inflation pressures, says RBI, reports the channel.
RBI has raised Repo Rate to 5.75% from 5.5% and Reverse Repo Rate has been hiked to 4.5% from 4%, reports CNBC TV18. The Nifty is back in the green with the Sensex trading at 18060 up 40 points from its previous close, and Nifty is at 5428, up 9 points.
RBI hikes Repo Rate by 25 bps and Reverse Repo Rate by 50 bps while CRR remains unchanged at 6%.
Allahabad Bank
Emkay Global Financial Services has recommended accumulate rating on Allahabad Bank with a target of Rs 220 in its July 23, 2010 research report.
“Allahabad Bank reported spectacular numbers for Q1FY11 with NII up 14.5% qoq and net profit up 54% qoq. Highlights were 29bps improvement in NIMs and lower NPAs sequentially. The slippages surprised positively as they stood at Rs 1.2 billion, 0.8% annualised vis-Ã -vis 1.4% for Q1FY10 and 1.7% for FY10. The gross NPAs were down by 7% qoq and net NPAs by 34% qoq. The provision cover stood at 73%. Valuations attractive at 1.2x FY11E/0.9x FY12E ABV. Upgrade to accumulate with price target of Rs 220 at 1.1x FY12E ABV,” says Emkay Global Financial Services research report.
Buy Fortis for target of Rs 171
There is a fresh breakout today on the charts, it has happened with very good volumes. The stock has already clocked volumes in excess of 1 crore on NSE. So that clearly is a sign that the stock is breaking out. The target that very clearly now emerges is 171. So first target on Fortis is 171. The stock can be picked up right now with a stop loss of around 155. So this is clearly a buy signal here.
Sunday 25 July 2010
Saturday 24 July 2010
Distressed Stocks
If you like buying good quality stocks at rock bottom price then "Distressed Stocks" section is for you. These are good company stocks but at almost 52 week low price.
Today's Stock is
Today's Stock is
Rain Commodities Ltd
For more details about Rain Commodities Ltd click on the above links
Friday 23 July 2010
Thursday 22 July 2010
Wednesday 21 July 2010
Tuesday 20 July 2010
Distressed Stocks
If you like buying good quality stocks at rock bottom price then "Distressed Stocks" section is for you. These are good company stocks but at almost 52 week low price.
Today's Stock is
Today's Stock is
K S Oils Ltd
For more details about K S Oils click on the above links
Monday 19 July 2010
Sunday 18 July 2010
Eagle Eye (equities)
The Nifty has declined in a five-wave pattern on the hourly chart and has also retraced 38.2% of its fall from 5453 to 5360...
Downside impulse speaks out loud
Downside impulse speaks out loud
Saturday 17 July 2010
Friday 16 July 2010
Thursday 15 July 2010
Wednesday 14 July 2010
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