Motilal Oswal Platter: Nestle, BHEL, Tata Tea, Titan Industries, Sterlite Industries, Jindal Power & Steel, NTPC
Motilal Oswal has maintained a ‘buy’ and increased the target price on Nestle India to Rs 1,768, an upside of 29 per cent from the current market price.
By INDIATIMES NEWS NETWORK |
MUMBAI: Motilal Oswal has maintained a ‘buy’ and increased the target price on Nestle India to Rs 1,768, an upside of 29 per cent from the current market price.
Nestle’s July-September, results were above Motilal’s expectations, with sales growth of 25.5 per cent year on year to Rs 900 crore against the brokerage estimates of Rs 870 crore and adjusted profit after tax growth of 36.5 per cent to Rs 120 crore against estimate of Rs 106 crore.
Domestic revenue grew 31 per cent YoY to Rs 880 crore, driven by strong volumes and price increase while exports declined 16.3 per cent. Gross margin expanded from 52.9 per cent in July-September of 2006 to 53.3 per cent.
The brokerage has revised 2007, 2008 and 2009 earning per share estimates from Rs 43.7, Rs 53.8 and Rs 6.7 to Rs.45.8, Rs 57.6 and Rs 70.7, respectively. The stock trades at 19.3 times 2009 estimated earnings. The brokerage expect valuation premium to sustain due to strong brands, technology back-up from parent and huge growth potential in processed foods sector.
On BSE today, Nestle India shares closed up 11.82 per cent at Rs 1,530.
BHEL
Motilal has maintained ‘Neutral’ stand on BHEL. The company reported net revenue of Rs 3,970 crore (up 18.7 per cent YoY), EBIDTA of Rs 700 crore (up 52.3 per cent YoY) and net profit of Rs 690 crore (up 91 per cent YoY) for July-September.
The numbers include income tax refund of Rs 270 crore, which reflects in other income; interest cost of Rs 17.4 crore; and prior period tax provision of Rs 31.0 crore. After adjustment, the net profit is Rs 560 crore (up 56.4 per cent YoY).
BHEL’s order backlog as at September stood at Rs 72,600 crore (up 58.9 per cent YoY) while the order intake for July-September was Rs 14,170 crore (vs Rs 11,000 crore in April-June). The current order backlog represents a book to bill ratio of 4.2 times on its 2006-07 revenue.
The brokerage expects BHEL to report a net profit of Rs 3,220 crore for 2007-08 (up 33.2 per cent, upgrade of 4 per cent) and Rs 4,160 crore in 2008-09 (up 29.2 per cent YoY, upgrade 4.7 per cent) and earning per share of Rs 66 for 2007-08 and Rs 85 for 2008-09. The stock trades at P/E of 41 times 2007-08 estimated and 32 times 2008-09.
On BSE today, BHEL shares closed down 1.55 per cent at Rs 2,613.35.
Nestle’s July-September, results were above Motilal’s expectations, with sales growth of 25.5 per cent year on year to Rs 900 crore against the brokerage estimates of Rs 870 crore and adjusted profit after tax growth of 36.5 per cent to Rs 120 crore against estimate of Rs 106 crore.
Domestic revenue grew 31 per cent YoY to Rs 880 crore, driven by strong volumes and price increase while exports declined 16.3 per cent. Gross margin expanded from 52.9 per cent in July-September of 2006 to 53.3 per cent.
The brokerage has revised 2007, 2008 and 2009 earning per share estimates from Rs 43.7, Rs 53.8 and Rs 6.7 to Rs.45.8, Rs 57.6 and Rs 70.7, respectively. The stock trades at 19.3 times 2009 estimated earnings. The brokerage expect valuation premium to sustain due to strong brands, technology back-up from parent and huge growth potential in processed foods sector.
On BSE today, Nestle India shares closed up 11.82 per cent at Rs 1,530.
BHEL
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Motilal has maintained ‘Neutral’ stand on BHEL. The company reported net revenue of Rs 3,970 crore (up 18.7 per cent YoY), EBIDTA of Rs 700 crore (up 52.3 per cent YoY) and net profit of Rs 690 crore (up 91 per cent YoY) for July-September.
The numbers include income tax refund of Rs 270 crore, which reflects in other income; interest cost of Rs 17.4 crore; and prior period tax provision of Rs 31.0 crore. After adjustment, the net profit is Rs 560 crore (up 56.4 per cent YoY).
BHEL’s order backlog as at September stood at Rs 72,600 crore (up 58.9 per cent YoY) while the order intake for July-September was Rs 14,170 crore (vs Rs 11,000 crore in April-June). The current order backlog represents a book to bill ratio of 4.2 times on its 2006-07 revenue.
The brokerage expects BHEL to report a net profit of Rs 3,220 crore for 2007-08 (up 33.2 per cent, upgrade of 4 per cent) and Rs 4,160 crore in 2008-09 (up 29.2 per cent YoY, upgrade 4.7 per cent) and earning per share of Rs 66 for 2007-08 and Rs 85 for 2008-09. The stock trades at P/E of 41 times 2007-08 estimated and 32 times 2008-09.
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On BSE today, BHEL shares closed down 1.55 per cent at Rs 2,613.35.
TATA TEA
Motilal is ‘Neutral’ on Tata Tea. Company’s July-September adjusted profit after tax of Rs 70.2 crore was higher than Motilal’s estimate of Rs 53 crore and adjusted EBITDA of Rs 182 crore lower than estimated Rs 185 crore. Reported profit after tax of Rs 109 crore is significantly higher than the brokerage estimate of Rs 53 crore.
Tetley reported 2 per cent sales growth in July-September to Rs 553 crore. Operating profit for the quarter stood at Rs 48.6 crore (Rs 32.6 crore in April-June). Profit after tax was Rs 26.2 crore in comparison to Rs 18.75 crore previous year, despite currency translation loss of 5 per cent.
The brokerage has increased 2007-08 and 2008-09 earning per share estimate from Rs 44.9 and Rs 78.7 to Rs 48.7 and Rs 81.3, respectively. The stock trades at 8.6 times 2008-09 estimated earnings (based on core earnings of Rs 66 per share in 2008-09, excluding cash per share of Rs 250). Although the stock offers value, lack of growth and any fresh triggers limit major upside.
On BSE today, Tata Tea shares closed up 0.95 per cent at Rs 821.45
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TITAN INDUSTRIESMotilal has maintained ‘Neutral’ outlook on Titan Industries. The company’s July-September numbers are marginally higher than Motilal estimates. Sales at Rs 710 crore was lower than their estimate of Rs 730 crore. However, EBITDA at Rs 79.7 crore was higher than estimated Rs 70 crore. Margins expanded 80 basis points as against expectations of 80 basis point decline. Adjusted PAT for the quarter was Rs 46.3 crore.
The brokerage has revised earning per share estimates from Rs 36.1 to Rs 37.5 for 2007-08 and from Rs 53.8 to Rs 54.7 for 2008-09. The stock trades at 46 times 2007-08 estimated and 31 times 2008-09 estimated earnings. The brokerage expects the company to report 44 per cent compounded annual growth in profit after tax over 2007-2009.
On BSE today, Titan Industries shares closed up 0.43 per cent at Rs 1,720.70
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STERLITE INDUSTRIESMotilal has maintained ‘Buy’ on Sterlite Industries post its second quarter earnings. Sterlite July-September profit after tax declined 7.1 per cent year on year to Rs 1,090 crore, which is higher than Motilal estimates of Rs 1,050 crore. EBITDA declined 23.6 per cent to Rs 1,970 crore against estimate of Rs 1,960 crore. Interest expense was lower due to repayment of foreign borrowings while other income increased due to interest income on Rs 7,500 crore of unutilised American depository receipt proceeds.
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Sterlite is a play on Indian mineral resources, with fully integrated zinc and aluminum facilities. Sterlite Energy is foraying into merchant sale of power through a 2,400MW power project in Orissa, which is likely to get operational by 2010 and is also planning further projects in this business. The company has surplus cash of Rs 7,500 crore (unutilised proceeds of ADR), besides over $1 billion of surplus cash on the books of Hindustan Zinc. The stock trades at 5.6 times 2008-09 estimated EV/EBITDA and 2.6 times 2008-09 estimated P/BV.On BSE today, Sterlite Industries shares closed up 1.72 per cent at Rs 1,039
JINDAL STEEL & POWER
Motilal has maintained ‘Buy’ on Jindal Steel & Power. JSPL reported 76.5 per cent year on year growth in profit after tax to Rs 280 crore, which is higher than Motilal estimate of Rs 230 crore. Net sales grew 61 per cent YoY to Rs 1,270 crore driven by 87 per cent volume growth in steel products though production of sponge iron and power declined 4 per cent and 11 per cent, respectively.
JSPL is planning another 1,300MW of power projects in its subsidiary JPL, which will take 3 years to complete. It is also undertaking projects in Orissa and Jharkhand, which will increase its resource base of iron ore & coal mines.
The brokerage believes the stock re-rating will continue due to pipeline of projects. The stock trades 15.7 times 2008-09 estimated and 12.2 times 2009-10 estimated consolidated earnings.
On BSE today, JSPL shares closed up 25.64 per cent at Rs 11,884.40
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NATIONAL THERMAL POWER CORPORATIONMotilal is ‘Neutral’ on NTPC. The company reported July-September revenue of Rs 8,020 crore (up 17.7 per cent YoY), EBIDTA of Rs 2,750 crore (up 49.3 per cent YoY) and net profit of Rs 1,930 crore (up 30.6 per cent YoY). Adjusted net profit stood at Rs 1,630 crore (up 12.9 per cent YoY), largely in line with Motilal expectations of Rs 1,540 crore.
In Eleventh Plan, the company plans to add 22,350 MW and of this, capacity under construction stands at 13,360MW, and expects to issue the main plant award for the balance 8,990MW by March 2008.
Motilal expects NTPC to report net profit of Rs 7,400 crore in 2007-08 (up 13.8 per cent YoY) and Rs 8,050 crore in 2008-09 (up 8.8 per cent). NTPC quotes at price earning ratio of 26 times 2007-08 estimated and 24 times 2008-09 estimated.
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On BSE today, NTPC shares closed up 2.33 per cent at Rs 239.40Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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