Exide big miss post Q2; Petronet, NIIT top picks: Equirus

As the earnings season progresses, Bhavin Shah, CEO of Equirus Securities picks the big hits and misses after the Q2 results. According to Shah, Exide was a big miss and they have a short rating on the stock with a target price of Rs 129. However, he is positive about Petronet LNG and Shah holds a long rating on its shares. From the IT space, Shah picks Persistent Systems and NIIT Tech as his favourites.

Here is the edited transcript of the interview on CNBC-TV18. Q: Let us start with Exide, which evinced a huge downward reaction post the earnings, how big a miss was it in your book?
A: Exide was a pretty big miss earnings especially with 20 percent below our expectations. There was a big jump in some of the expenses, perhaps due to advertising but we also think that Exide faces increasing competition in multiple segments. While inverters may have helped last quarter, the inverter revenues might have dipped and it may have affected the margins. So there was a 20 percent miss on Exide. Q: You would not buy Exide on this decline?
A: No, we have had a short rating on the stock and we continue with that with a target price of Rs 129. Q: What about Petronet LNG, better set of numbers?
A: Yes, Petronet LNG had a good set of numbers. In fact there was a surprise on the volume front as well and more importantly, based on our discussion with the regulators, it seems that there is no imminent regulation of the marketing margins. That gives some comfort. There might be some potential delay in the Kochi terminal ramp up but on the whole, we had increased our estimate for FY13 post these results. Q: What kind of target you have on that price?
A: For Petronet LNG we have a long rating with a target price of Rs 192. Q: From IT, Persistent Systems went on quite a bit post the earnings, have you also upped your estimates after looking at this quarter?
A: Persistent was definitely the highlight of the results so far in the IT space. There was a very strong dollar growth and we have to increase our estimates by more than 10 percent for FY13 and FY14. That clearly burns in their non–linear revenues, which though is hard to predict, we think the company is creating a nice base around that. We had to increase our estimates and we are now looking at a target price of Rs 530. Q: From the same space you like NIIT Tech as well?
A: Yes, we do like NIIT Tech. Though, there was a foreign exchange loss this quarter which affected the earnings significantly, even with relatively healthy revenue and margin performance. There was currency loss because earlier the rupee was at 55 and we are now moving to 53 per dollar. Both those factors pushed us to reduce our estimates by about 10 percent. But, we still see valuation and NIIT being very reasonable with decent dividend yield, we continue with a long rating and Rs 350 target price.