(This was posted in myiris site: Link)
Broking firm Prabhudas Lilladher have come out with report on earnings expectations for third quarter of financial year 2011-12. Following are the earnings expectations for Sensex companies from their report:
Infosys:
We expect Infosys to report a revenue growth of 13.7% in INR terms, with volume growth of 4.7% for Q3FY12, meeting their mid-range guidance in USD. We expect pricing improvement to remain muted on QoQ basis. We expect cross-currency to have negative impact of 1% QoQ. We expect the margins to expand by 263bps for the quarter due to currency depreciation and cost absorption. We expect Infosys to revise guidance of 17-18% YoY growth in USD revenue for FY12.
Reliance Industries:
On the back of declining GRMS during the quarter, RIL is likely to report weak set of numbers. Benchmark Singapore GRMs have averaged at USD 7.9/bbl. We expect GRMS of USD 7.0/bbl for RIL during the quarter. Weakness in the Dubai-AH spreads is likely to adversely impact the spreads over benchmark GRMs. Rupee depreciation and higher other income are likely to help matters during the quarter.
ITC:
We expect Cigarette volumes to grow 6% for the quarter. Continued revenue momentum (expect 20% plus revenue growth) in Non-Cig FMCG business, with sustained higher profitability in Paper and Agri division, will mark Q3. We expect stock performance to remain range-bound as one approaches the budget. Cigarette did not see any excise increase in the previous budget. We are building in 15% excise increase in Cig for FY13e.
Housing Development Finance Corporation (HDFC):
We expect a usual quarter for HDFC limited with stable margins. We expect 4% sequential loan growth (21% YoY growth). Impact of no pre-payment penalty and higher standard provisions on the retail loan book would be negligible. Reported PAT growth is expected to be 12% YoY, mainly due to large investment gains booked in Q3FY11, adjusted for which we expect PAT growth of 22% YoY.
ICICI Bank:
Top-line growth will continue to remain a challenge in Q3FY12. We expect flat-to moderate improvement in margins (2.6% for Q3FY12). Retail asset quality remains comfortable and we expect 75bps of credit costs in Q3FY12, with possible recognition of GTL as restructured asset in Q4FY12. Overall, we expect PAT growth of 8% YoY, mainly due to low fee income momentum. Key thing to watch out for would be (1) Increase in restructured book and (2) Management commentary on top-line growth and overall asset quality.
HDFC Bank:
We expect overall growth trend to remain relatively robust, with 22.5% YoY growth in credit (3.5% sequential growth). Margins are expected to remain flat sequentially at 4.1% and with a 25% YoY growth in fee income, we expect operating profit growth of 15% YoY. With retail asset quality still not showing any signs of initial crack, we factor in 70bps of credit costs in Q3FY12, leading to 28% PAT growth in Q3FY12.
Tata Consultancy Services (TCS):
We expect TCS to report 4.7% volume growth, with touch positive bias of 0.1% on the pricing front. EBITDA margin is expected to expand by 219bps due to currency depreciation. We expect cross currency to have a negative impact of 170bp. Contrary to Infosys, TCS would have a negative impact on margin due to higher utilization. We are factoring ` 4 billion of forex loss. We expect the management to give positive commentary on client spending and visibility on realization improvement.
L&T:
L&T’s order inflow is expected to be at ` 89 billion (there could be some internal order bookings to the tune of ` 5-10 billion) as against ` 133 billion in Q3FY11 and ` 161 billion in Q2FY12, which was poor. Thus, the FY12E YTD order inflow has been ` 412 billion as against the company’s full year expectations of ` 834 billion; an achievement which seems like an impossible task. Failure in domestic Hydrocarbon segment continues with Power. Buildings, Road EPC and International orders contributed to the order inflow for the current quarter.
State Bank of India(SBI):
We expect a PAT growth of 10% YoY for SBI. Though NII growth is expected to remain robust at 16% YoY, weak fee income momentum (flat YoY) and higher credit costs (30% YoY) will lead to slower PAT growth. Asset quality is expected to improve from Q2FY12 levels, with improving recoveries and upgrades and lower slippages QoQ, but we do not expect improvement to be as drastic as other PSU banks. Our relative preference for SBI among PSUs is mainly due to lower airlines/SEB/private power exposure which will hit bank P&Ls in FY13/14.
ONGC:
ONGC crude oil & natural gas sales volumes are likely to be mute on QoQ basis at 5.78MT and 5.1BCM, respectively, during the quarter. On the back of our provisional estimate of 33% subsidy share for upstream and consequently, 82% of the same to ONGC, we expect the net realization for the quarter to stand at USD 71.8/bbl (USD 64.7/bbl in Q2FY11).
Bharti Airtel:
We expect India wireless voice ARPM to increase marginally by 1% QoQ, driven by pricing strength and focus on high quality usage. Total network minutes are also expected to show seasonal growth of 5% QoQ after the decline of 1.9% QoQ in Q2FY12. Subscriber additions continue to decelerate owing to a likely shift in focus to quality subs. The declining INR is also expected to have an adverse impact on Bharti’s earnings of ` 2.4 billion. We expect volume momentum to continue in Africa, with 10% QoQ growth in total minutes. We reduce our EV/EBITDA based target by 7% to ` 392 to reflect lower sub additions.
HUL:
We expect HUVR to report 8-9% volume growth, driven by new launches over the year and intensive winter. Soaps and Detergents margins will benefit from low base (7.5% EBIT margins in Q3FY11). We expect ad spends to come in at 12-12.5% in Q3. Impact of currency depreciation on HUVRs raw material index remains a key concern. Palm Oil as well as LAB prices increased QoQ by 4-5%.
Tata Motors:
Standalone net revenue (including other operating income) is expected to fall by 3% QoQ owing to 2% fall in volumes and lower revenues in other businesses. Impacted by higher coking coal prices and lower scale benefit, EBITDA per ton is expected to fall by 4% or ` 717/ton QoQ to ` 17,000. Hence, EBITDA would decline by 6% QoQ (3% YoY) to ` 27.4billion. Adjusted PAT is expected to decline by 13% QoQ to ` 13.5 billion.
M&M:
Automotive segment reported a growth of 5.3% QoQ, whereas, Tractors reported a growth of 2.1% QoQ. Overall volumes grew by 4.3% QoQ, whereas average realization/vehicle is likely to increase by 1% on account of price hikes taken during August 2011. EBITDA margins are likely to be flat at 12.4% levels QoQ despite stable raw material during the quarter (Steel prices are flat QoQ) on account of rupee depreciation which impacts the import cost for their vendors.
NTPC:
Unit#1 660MW of Sipat Super Thermal Power Project has been declared commercially operational w.e.f. October 2011. With this, the commercial capacity of NTPC is 30990MW. The company has also commissioned Unit#2 500 MW of Indira Gandhi Super Thermal Power Project at Jhajjar. NTPC has forayed into the ‘International O&M Operator’ by winning O&M contract in Bangladesh for 2*120MWs gas power plant.
Wipro:
We expect Wipro to report IT Services revenue growth of 2.5% in USD terms to USD 1,510 million, in line with their guidance of 1.8-3.8% QoQ growth. We expect volumes to grow by 4.5% sequentially, with no pricing improvement. EBITDA margin is expected to expand by 221bps due to currency depreciation. We are expecting management commentary on change in strategy to perform in line with its Tier-1 competitors. We expect positive commentary with guidance of investment in Sales and Marketing effort by the company.
Tata Steel:
Standalone net revenue (incl. other operating income) is expected to fall by 3% QoQ owing to 2% fall in volumes and lower revenues in other businesses. Impacted by higher coking coal prices and lower scale benefit, EBITDA per ton is expected to fall by 4% or ` 717/ton QoQ to ` 17, 000. Hence, EBITDA would decline by 6% QoQ (3% YoY) to ` 27.4 billion. Adjusted PAT is expected to decline by 13% QoQ to ` 13.5 billion.
BHEL:
We expect the execution to remain strong with a 20% YoY growth in sales to ` 106 billion. However, with no major orders announced in this quarter, we expect order booking to remain subdued. The NTPC bulk tenders are also under evaluation and are likely to get booked in Q4FY12. BHEL forayed into Ukraine with a maiden order worth ` 400m for Steam Turbine Package from Arcelor Mittal’s steel.
Bajaj Auto:
BJA reported a 12.9% YoY growth in two-wheeler sales and 18.8% YoY growth in the three-wheeler segment for the quarter, including exports. Average realization/vehicle is expected to increase by 3% QoQ on account of pass on of increased cost due to DEPB withdrawal and rupee depreciation. EBITDA margins are likely to improve 60bps QoQ on account of 7.5% QoQ increase in export realizations.
Jindal Steel:
Thanks to higher revenues in pellet and power biz, standalone revenue is expected to grow by 3.9% QoQ despite 3% decline in steel volumes. Thanks to higher contribution from margin rich pellet and power, standalone EBITDA would fall marginally by 2% QoQ despite lower steel volumes. Given higher depreciation and interest cost associated with commissioning of a CPP of 135MW and billet caster, PAT would fall by 7% QoQ. Jindal Power is expected to report PAT of ` 4.8 billion against ` 4.9 billion and ` 4.1 billion in Q3FY11 and Q2FY12, respectively.
Coal India:
Benefited by 22% rise (` 255 per ton) in realizations, net revenue is expected to grow by 22% YoY despite 0.7% decline in volumes at 110m tons. Cost per ton is expected to rise by 20% (` 167/ton) to ` 1,010 on account of wage revision and higher variable costs. Hence, EBITDA per ton is expected to expand by 29% to ` 393. Accordingly, EBITDA is expected to grow by 27% YoY or ` 3.2 billion to ` 43.1 billion. Thanks to higher yields on ` 550 billion worth of cash and lower tax rate, PAT is expected to grow by 52% to ` 40.2 billion.
GAIL (India):
GAIL is likely to report a subdued performance for the quarter on the back of stagnant transmission volumes. Transmission volumes during the quarter are likely to be around 119 mmscmd. For the current quarter under consideration, we believe GAIL is likely to share subsidy of ` 6.95 billion. Petrochemical sales volumes are likely to decline on QoQ basis.
Hero Motocorp:
Average realization/vehicle is expected to improve by ~1% QoQ on account of price hikes taken during the quarter. EBITDA margins are expected to remain flat sequentially on account of higher spend on advertising and promotion. On account of higher amortization charges due to rupee depreciation against Yen, we expect HMCL to post a 5.1% growth in PAT on a QoQ basis.
Tata power:
On a standalone basis, M&HCV volumes grew by 7.7%, whereas the LCV segment grew by 18.7%. The passenger vehicle segment surprised positively with a growth of 37.2% led by new lunches and higher discounts. Led by the success of Land Rover ‘Evoque’, JLR is likely to report 32.8% YoY and 23.3% QoQ improvement in volumes. We expect the EBITDA margin at JLR to improve 200bps QoQ to 17.0% on account of operating leverage and favourable currency movement.
Sterlite Industries:
EBITDA is expected to fall by 6% QoQ (` 1.7 billion) to ` 22.5 billion, primarily due to 31% fall (` 1.6 billion) in EBITDA of International zinc business. Led by incremental volumes in Sterlite energy, Power business’s EBITDA would grow by 34% QoQ to ` 1.8 billion. Adjusted PAT would decline by 11% QoQ to ` 11.5 billion due to weaker operational earning and higher losses in VAL.
Maruti Suzuki:
MSIL reported a 27.2% decline in the overall volumes on account of a steep 28.9% YoY decline in domestic sales. The strike at Manesar is likely to hit the profitability of the company. MSIL would continue to face pressure on margins on account of unfavourable currency movement (Yen against rupee appreciated by 13.0% QoQ) and higher advertising spend (on account of higher discounts).
DLF:
In terms of progress on the non-core asset sales front, the company has received initial payment to the tune of ` 1.4 billion of the total sales value of ` 5 billion from the sale of the Noida IT Park to IDFC. The company has sold its Pune IT SEZ (67% stake) to Blacstone for ` 5.4 billion. It has also bought out 26% stake in its hotel JV (DLF Hotels & Hospitality) from Hilton, thereby, making it its wholly-owned subsidiary, which in our opinion, is a precursor to exiting this venture. In terms of new launches, Bengaluru residential and Mullanpur plots were launched during the quarter, which we believe, should result in healthy sales of 2.5msf as against 1.28msf in Q2FY12.
In terms of progress on the non-core asset sales front, the company has received initial payment to the tune of ` 1.4 billion of the total sales value of ` 5 billion from the sale of the Noida IT Park to IDFC. The company has sold its Pune IT SEZ (67% stake) to Blacstone for ` 5.4 billion. It has also bought out 26% stake in its hotel JV (DLF Hotels & Hospitality) from Hilton, thereby, making it its wholly-owned subsidiary, which in our opinion, is a precursor to exiting this venture. In terms of new launches, Bengaluru residential and Mullanpur plots were launched during the quarter, which we believe, should result in healthy sales of 2.5msf as against 1.28msf in Q2FY12.
