Markets in a wait and watch mode with the RBI monetary policy coming up today
Posted on April 29th, 2008 in Personal Finance) by Motilal Oswal Securities Ltd |
Today’s View: Positive bias Intermediate Trend Up
Markets in a wait and watch mode with the RBI monetary policy coming up today. A 25-50bps increase in Repo in factored in the prices. An increase in CRR or increase in repo more than 50bps points would come as a negative surprise .Maintain a positive stance
“Indiabulls Securities (IBSEC IN, Mkt Cap: $750mn, CMP Rs123) 4QFY08 revenues grew 55% YoY to Rs1.72b (down 18% QoQ) led by growth in Broking and Related services which grew 46% YoY to Rs1.61bn. Other Income grew to Rs98.2mn v/s Rs10.6mn in 4QFY07. QoQ fall in the revenues is attributed to fall in the overall volumes in the industry (down 27% QoQ). The mangement has not disclosed its market share (we est at ~4.8% market share).
For FY08, revenues grew 45% YoY to Rs6.21bn. Brokerage and related income constitutes ~96% of the total revenues v/s 95% in FY07. EBIT grew to Rs 4.0bn v/s Rs2.1bn in FY07. In FY08, EBIT margins improved from 48% to 62%. In FY08, PAT increased 41% to Rs2.52bn and the PAT margins have improved to 39% v/s 31%.
In 4QFY08, EBIT grew 60% YoY to Rs 962mn v/s Rs600mn in 4QFY07 implying the improvement in EBIT margins to 56% v/s 54% in 4QFY07. In 4QFY08, PAT grew 41% YoY to Rs534mn v/s Rs380mn. PAT margins improved to 39% v/s 34% in 4QFY07.
The company has declared dividend of Rs7.5 per share implying dividend yield of >6%. The stock trades at 12x FY08 EPS of Rs9.9.A very good trading buy.”
Sesa Goa reported very strong numbers . Reported EPS stands at 392 for FY08. Realisations doubled at $81/tonne vs $40 an year ago. Company reported Q4 net profit Rs7.98bn (up 220%), income Rs16.44bn (up 120%), Iron ore sales 12.39mn tons (10.87mn tons), exports 10.18mn tons (7.66mn tons) and Q4 average earning per ton of ore exports $81 vs $40. Sales are more in favour of spot than contract .Company declaes 1:10 stock split and a1:1 bonus. A very strong buy for trading as well as investments
“IDFC’s consolidated earnings increased by 61% YoY in 4QFY08 to Rs1.5b and 47% in FY08 to Rs7.4b. Earnings were lower than our estimate (Rs7.7b for FY08) due to lower treasury gains during 4QFY08 and higher operating expenses.
Balance sheet grew 56% in FY08 to Rs279b, driven by a 47% growth in loans to Rs205b and a built up of proprietary and treasury investment portfolio. Treasury portfolio increased to Rs52.6b in FY08 from Rs28.5b in FY07 (up 85%). Gross disbursements increased 63% to Rs120b in FY08. Approvals increased by 54% to Rs203b. Outstanding disbursements grew 52% in FY08 to Rs234b, indicating a loan book growth going forward.
IDFC reported ROA of 3.1% in FY08 (12-m rolling), lower than Dec 07 level of 3.2% and 3.3% in FY07. While overall margin was stable QoQ, it has improved by 10bp YoY. Operating costs increased significantly during 4QFY08 - up 203% YoY and 37% QoQ, affecting ROA. We await management clarification.
We continue to be positive on the growth prospects and believe that IDFC can leverage its strength to earn significant higher fee income. We would be revising our estimates. Based on our current estimates, we expect IDFC to report an EPS of Rs8 in FY09E and Rs10 in FY10E.
Book value would be Rs52 in FY09 and Rs60 in FY10. Stock trades at 3.2x FY09E BV and 20.9x FY09E EPS and 2.8x FY10E BV
and 16.7x FY10E EPS. We expect RoA of 3% and RoE of 18% in FY10. Maintain Buy for investments “