Navneet Publications (India)
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs405
Current market price: Rs332
Results in line with expectations
Result highlights
- The Q4FY2006 results of Navneet Publications (India) (NPIL) are in line with our estimates. The FY2006 earnings per share (EPS) were Rs19.41, in line with our estimated EPS of Rs19.21.
- The net sales grew by 13.21% from Rs39.28 crore in Q4FY2005 to Rs44.47 crore in FY2006, helped by a 22.12% growth in the stationery segment. The same stood at Rs26.5 crore in Q4FY2006 as against Rs21.7 crore in Q4FY2005.
- The operating profit grew by 20% from Rs3.1 crore in Q4FY2005 to Rs3.72 crore in Q4FY2006. The operating profit margin (OPM) improved by 48 basis points from 7.89% in Q4FY2005 to 8.37% in Q4FY2006.
w Unlike in the last reported two quarters, the forex loss did not take its toll on the other income and ultimately the bottom line. - The profit before tax grew by 50.71% from Rs1.40 crore in Q4FY2005 to Rs2.11 crore in Q4FY2006 and in the same period, the profit after tax (PAT) stood at Rs1.52 crore as against Rs1.21 crore in Q4FY2005, a growth of 25.62% year on year (yoy).
UltraTech Cement
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs1,000
Current market price: Rs828
Cement prices does the trick
Result highlights
- UltrarTech Cement's (UTCL) Q4FY2006 net profit at Rs81.8 crore was above our expectation.
- The net sales for the quarter have improved by 41% to Rs1,022 crore, helped by a 16.3% growth in the cement volumes and a 21% growth in the cement realisations.
- The operating profit margins (OPMs) for the quarter increased by 380 basis points to 18.8% primarily driven by the improvement in the cement realisations, which brought the operating leverage into play.
- Helped by a 41% increase in the revenues and a 380-basis-point improvement in the OPMs, the operating profit for the quarter soared by an impressive 77% and stood at Rs192 crore.
- With a 15% drop in the interest cost, the pre-exceptional profit before tax for the quarter jumped by a whopping 238%.
- During Q4FY2005 there was a tax write back of Rs45.8 crore on account of the reduction in the corporate tax rate. Adjusting for the same the pre-exceptional net profit for Q4FY2006 surged by 127%. The reported net profit, which stands at Rs81.6 crore for Q4FY2006, registered a jump of 1,528%.
At the current market price of Rs828 the stock is discounting its FY2008 earnings by 20x and its earnings before interest, depreciation, tax and amortisation (EBIDTA) by 12x. On enterprise value (EV) per tonne basis the stock is trading at attractive valuations of US$136 as compared to its peers, which are trading at close to US$160-180 per tonne of cement. With firm cement prices and the company's modernisation drive, we expect UTCL's earnings momentum to gather pace and register a compounded annual growth rate (CAGR) of 76.5% over FY2006-FY2008E. We believe the valuations are attractive in the wake of the strong earnings growth and the sharp improvement in the return ratios. We maintain our Buy recommendation on the stock with a revised price target of Rs1,000. At our price target UTCL will be trading at US$160 per tonne of cement, which is still at a discount to its peers