Angel Broking's research report
"ACC's stand-alone top-line fell by 13.1 percent yoy to Rs 2,693cr. Net sales of grey cement business remained flat on a yoy basis. While realization remained flat on a yoy basis at Rs 4,307/tonne, volume was down by 1.5 percent yoy to 5.85mn tonne. However, on a sequential basis, realization rose by 1.7 percent yoy aided by price hikes in October and November. The company's operating profit per tonne stood at Rs 617, down 7.9 percent yoy, impacted by higher freight costs. Freight costs per tonne rose by a steep 14.3 percent on a sequential basis to Rs 1,049. While the busy season charge imposed by railways pushed up the railway freight fares to some extent, the spurt in freight costs per tonne indicates an increase in lead distance."
Outlook and valuation: "We expect ACC to register a 4 percent yoy growth in its top-line over CY2012-14. The bottom-line is expected to de-grow at a CAGR of 11.8 percent over the same period due to high cost pressures and poor pricing scenario. At current levels, the stock is trading at an EV/tonne of USD 80 on CY2014E capacity. We recommend Buy on the stock with a target price of Rs 1,225."
"Aurobindo Pharma posted a good set of numbers for the quarter, much ahead of our expectations. For the quarter, the company posted sales of Rs 2136cr (vs an expected Rs 1,790cr), registering a growth of 37.6 percent yoy. The growth was mainly driven by US formulations, which grew by 81.4 percent yoy. The gross margins expanded by 8.3 percent yoy, on a better product mix. This along with operating leverage aided the OPM to expand by 14.4 percent yoy to end the period at 29.9 percent vs 15.5 percent during the corresponding period of last year. This led the reported net profit to come in at Rs 418cr vs Rs 92cr in 3QFY2013 and the adjusted net profit to come in at Rs 416cr vs Rs 137cr during the corresponding period of last year."
Outlook and valuation: "We estimate the company's net sales to log a 39.8 percent CAGR to Rs 11,296cr over FY2013–15 on the back of supply agreements in the US and antiretroviral (ARV) formulation contracts, which will be supplemented through the recent acquisition of the Western European formulation business of Activas. This has also led APL to become a ~USD 2bn sales company, with more than 85 percent of sales being accounted by formulations. Thus we expect the company to trade at higher multiples in comparison to its historical multiples. We recommend an Accumulate on the company with a price target of Rs 581," says Angel Broking research report.
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