Recommendation: Buy
CMP = Rs 2,019
Price target: Rs 2,370
- Bajaj Auto Ltd's (BAL) stand-alone revenues for Q3FY2006 grew by 24.6% year on year (yoy) on the back of a 14% growth in volumes and a 9.3% growth in realisations.
- The growth in the sales of three-wheelers helped the company expand its operating profit margin (OPM) by 289 basis points to 17.9%. As a result the stand-alone operating profit grew by 48.5% yoy.
- The stand-alone adjusted net profit grew by 50.1% to Rs290.8 crore.
The gross premium written during the quarter in the life insurance and general insurance businesses grew by 296% and 83% respectively. However, the insurance business reported a loss of Rs26 crore for the quarter due to the transfer of Rs35.6 crore to its policyholders' account to fund the deficit in the policyholders' account of the life insurance business. - A strong growth in Q3FY2006 leaves room for upgradation of earnings estimates for FY2006 and FY5007.
- At the current market price of Rs 2,019, the stock is quoting at 17.5x its FY2007E stand-alone earnings per share (EPS) and 10.2x on enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) basis. I reiterate Buy recommendation on the stock with the price target of Rs 2,370.
Recommendation: Buy
CMP = Rs 440
Price target: Rs 510
- In Q3FY2006 Cipla's net sales increased by 30.9% year on year (yoy) to Rs780.62 crore on the back of a 35% increase in its export revenues.
The operating profit margin (OPM) was maintained at 20.4% this quarter. This resulted in a 32% increase in the operating profit to Rs 158.9 crore. - Increased interest and depreciation costs and lower other income resulted in an 18.4% decline in the profit after tax (PAT) to Rs 102.6 crore yoy. The net profit margin for the quarter stood at 13.1%.
- The company had Rs 72.7 crore of exceptional revenue from the insurance claims due to the damage caused to its goods at its Bhiwandi godowns by the Mumbai floods in July 2005.
- At the current market price of Rs 440, Cipla is trading at 21x FY2007 earnings estimate. I maintain Buy recommendation on Cipla with the revised price target of Rs 510.
Recommendation: Buy
CMP = Rs 1,292
Price target: Rs 1,450
- Container Corporation of India (Concor) reported a net profit of Rs 137 crore for Q3FY2006. The 35% year-on-year (y-o-y) growth was higher than our estimates on account of a lower tax rate during the quarter.
- Its revenues grew by 25% year on year (yoy) in Q3FY2006 to Rs636 crore mainly driven by a strong growth in its export-import (exim) and domestic revenues. The exim revenues grew by 26% y-o-y to Rs 506 crore and the domestic revenues grew by 21% yoy to Rs 130 crore. Both the segments registered an impressive growth in realisations (exim 12.2% and domestic 19%).
- However, the margins fell by 190 basis points, as Concor has not yet passed on the 15% freight rate hike carried out by the Indian Railways in December 2005. The other income grew by 25% y-o-y and the depreciation grew by 21% yoy to Rs 20.7 crore due to a jump in the number of wagons acquired over the past one year.
- The tax rate for the quarter fell to 20% in Q3FY02006 against 30% last year, thanks to the 80IA benefits enjoyed by the company for investing in inland container depots (ICDs) and wagons after April 2001. As a result, the net profit grew by 35% yoy to Rs 137 crore during the quarter.
