Cluster: Vulture’s Pick
Price target: Rs575
Current market price: Rs328
Top line growth ahead of expectations
- Esab India's Q4CY2006 results are good. Its top line grew by 32.4% which was ahead of our expectations. The profit before tax grew by an impressive 50%. However due to a higher tax rate vis-à-vis Q4CY2005, the net profit growth of 21.7% was below our expectations.
- The higher top line growth was aided by the company's new facility in Chennai. This facility, on a fully operational basis, can contribute additional Rs60 crore to the top line. The revenues for the quarter recorded an impressive 32.4% growth as the equipment division's revenue increased by a whopping 98% and the consumable division's revenue grew by 16%.
- The operating profit for the quarter grew by 49.6% to Rs14.4 crore as the operating profit margin (OPM) improved by 211 basis points to 18.4%.
- The improvement in the OPM was on account of the better profitability of the equipment division. The earnings before interest and tax margin of the equipment division improved by 1,200 basis points to 17.5%.
- The depreciation for the quarter increased by 35% as the company has commissioned its new plant in Chennai.
- The tax rate for the quarter stood at 33.3% as against 18% in the same quarter last year.
- Consequently, the net profit grew at a lower rate of 21.7% to Rs10.1 crore.
New Delhi Television
Cluster: Emerging Star
Price target: Rs348
Current market price: Rs304
Fund mobilisation begins for new channels
New Delhi Television (NDTV) has received a major push towards implementing its ambitious plans of diversifying its broadcast offerings by entering the general entertainment and lifestyle space. Last week the news broadcaster received the approval of the Foreign Investment Promotion Board to raise foreign investment of Rs585 crore (~$130 million) for its proposed channels through its UK-based subsidiary NDTV Network Plc. Taking a step forward, it has also entered into a definitive agreement with Com Ventures V.I.L.P for infusing $20 million in NDTV Network Plc. We believe the company will expedite the fund raising process by roping in strategic/financial investors or go for a listing on the Alternative Investment Market (commonly known as AIM).
MUTUAL FUNDS: WHAT’S IN—WHAT’S OUT
Fund Analysis: March 2007
An analysis has been undertaken on equity and mid-cap funds' portfolios, indicating the favourite picks of fund managers for the month of February 2007. Equity funds comprise of all diversified, index, sector and tax planning funds, whereas mid-cap funds include a universe of 18 funds such as Reliance Growth, Franklin India Prima Fund, HDFC Capital Builder, Birla Mid-cap Fund etc.Download here