Grasim (Challenging times, MP): We expect VSF prices to soften as supply tightness eases with global production capacity expanding by a third over 2009 and 2010. In the cement business (~80% of FY09ii revenue), the industry’s aggressive capacity expansions in the northern region would make it difficult for Grasim to increase volumes much faster than industry growth. We cut our earnings estimate for FY09 by 8% and for FY10 by 11%. Grasim’s current price translates to US$102/tonne of its FY10ii cement capacity, which is at a discount to current replacement cost of US$140/tonne. However, there are no near-term triggers; maintain MP, target price of Rs1,982 (down from Rs2,200).
Tata Steel (Corus numbers slightly below expectation, BUY): Tata Steel’s recurring consolidated profit rose 21% QoQ to Rs15.6bn in 4QFY08. EBIDTA for the quarter stood at Rs44.2bn, up 12.2% QoQ, but marginally lower than our estimate, as income from subsidiaries fell short of our expectation. In FY09, we expect Tata Steel’s domestic operations to benefit from strong volume growth (20% YoY) combined with higher prices and relatively small cost increases (thanks to backward integration)
Accenture (Bullish commentary; Inline results): Accenture’s 3QFY08 result was mixed: it beat its revenue guidance by 1%, on the back of currency uplift. Margin improvement was substantial (EBIT improved by 276bps QoQ). On the flip side, it maintained target guidance for new bookings despite the guidance-beating results.
Thanks & Regards,
IIFL – Institutional Equities
Mumbai
BigGains !!
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