What's Inside |
Results |
Jet Airways: Higher-than-expected losses due to increased fuel costs; no respite in sight, cut rating to SELL from REDUCE |
· | Higher-than-expected losses due to increased fuel costs and low international seat factors | · | Outlook remains bleak with continued strength in fuel prices, domestic overcapacity and start-up nature of international operations | · | Jet Lite's FY2008 performance improves over a low base; turnaround to test management's execution skills | · | Cut target price to Rs450; and rating to SELL from REDUCE earlier | |
United Breweries: Margin expansion in a difficult year but rich valuations do not offer upsides |
· | 4QFY08 profits higher than expected due to fixed cost savings, but input cost pressures remain | · | JV operations as per expectations, awaiting more clarity post Heineken acquisition of S&N stake | · | Reduce target price to Rs 160 (Rs 169 earlier) and maintain REDUCE rating | |
PSL: 4QFY08 results below estimates; revise estimates for recent order flow; maintain BUY |
· | 4QFY08 results - revenues and PAT below estimates due to lower EBITDA margin | · | Revise FY2009E and FY2010E earnings estimates upwards by 19% and 26% for higher volumes and better realizations | · | Revise volume assumptions for recent order flows and pricing assumptions in line with current market trends | · | Maintain target price at Rs500 and BUY rating; increase WACC assumption to 13% | |
Change in Recommendation |
Hindalco: Rights issue to fund Novelis acquisition; balance funding may prove costly - cut target price to Rs150; lower rating to REDUCE |
· | Hindalco will raise Rs50 bn through a rights issue to fund the Novelis bridge loan of US$3 bn - balance to be funded through treasury and debt | · | We reduce our target multiple to factor in lower global valuations for non-ferrous companies - we now value both aluminum and copper business at 6X FY2010E EBITDA | · | Reduce target price to Rs150/share (Rs215/share earlier) factoring lower multiple, dilution on account of rights issue | |
Updates |
Economy: Growth to trim on RBI's strong signal; but inflation is destined to stay high |
· | RBI hikes CRR by 50 bps to 8.75, repo rate by 50 bps to 8.5%; we expect CRR at 9.25% and repo rate at 8.75% during the year | · | CRR hike to mop up nearly Rs200 bn of primary liquidity; repo rate hike to increase cost of borrowed funds | · | Tightening to slow aggregate demand; revise our real GDP growth projection to 7.9% from 8.2% for FY2009E | · | Inflation likely to stay in double digits till 3QFY09; but preemptive tightening to help contain second round impact of fuel-price-led inflation | |
Cement: Crude oil linked inflation woes to impact profitability of cement companies |
· | Average realizations for FY2009 reduced by Rs5-7/bag | · | Higher freight costs on account of revised fuel prices | · | Steep correction in valuation multiples, ahead of margin correction | |
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