October 31, 2013 / 17:22 IST
Emkay Global Financial Services has come out with its research report on various stocks. The research firm, has recommended to accumulate LIC Housing Finance, Nestle India, Bharti Airtel, Mahindra Holidays and Resorts India however, buy Ashoka Buildcon, Lupin, Havells India and Grasim Industries in its research report dated October 31, 2013.
LIC Housing Finance
Strong operational performance; retain accumulateLIC Housing Q2FY14 NII at Rs4.5bn and net profit at Rs3.1bn - inline with estimates. Spreads at 1.22 percent, up 14bps yoy aided by 26bps yoy improvement in retail spreadsLoan growth driven by retail segment (+21 percent yoy). Retail disbursement grew 12 percent qoq; repayment ratio stable at 12-14 percent levels for past 8-quarters; Retail GNPA declined 8 percent yoy Asset quality concern abating with GNPA / NNPA down 5 percent / 12 percent qoq. NHB norms enabled improve tier-I CAR to 12.4 percent and will augment 20 percent growth in loan portfolio over FY13-15ERevised our earnings marginally. LICHF remains preferred bet given growth visibility, +ve ALM gap, abating NPA risks and valuations at 1.3x FY15ABV. ACCUMULATE, TP Rs 260Ashoka Buildcon
Operational Performance in LineEBITDA at Rs775 mn -2.4 percent YoY (vs estimate of Rs842 mn) as E&C EBITDA grew by 14.9 percent, margin 13.5 percent up 180bps YoY, BOT EBITDA edged lower by 11.6 percent YoY, margin contractsRPAT at Rs199 mn (-17 percent YoY) vs estimate of Rs220 mn also supported by lower interest expenses as working capital reduces Modeling in lower traffic growth from Dhankuni, PNG, Durg road project and lower other income cut EPS for FY14E by 6.6 percent. Revised TP downwards by 3.5 percent to Rs83 as revised equity value for road projects due to lower traffic growth Scale up in the BOT portfolio (80 percent of BOT projects to get operational by FY15E), and minimal funding constraint provide growth opportunity. Maintain Buy TP Rs 83Nestle India
Lackluster; Retain AccumulateResults below estimates - Revenue Rs 23.5bn (+11 percent yoy). Ebidta Rs 4.8bn (+10 percent yoy), Apat Rs 2.8bn (+5 percent yoy)Domestic performance remains lackluster with revenue growth of 8 percent yoy to Rs 21.8 bn and benign volume performance impacted by portfolio optimization EBIDTA margins dips 10bps yoy to 20.5 percent impacted by rise in operational expenses and higher provisions & contingenciesDraw comfort in FCF yield of 2.8 percent for CY13E, Maintain 'Accumulate' with target price of Rs 5,000/Share. Acumulate the stock with a target price of Rs 5000Lupin
In-line results; Future outlook steadyLupin's Q2FY14 Results in-line; (vs estimates)- Revenue at Rs26.7bn (vs Rs26.6bn), EBITDA at Rs6.6bn (vs Rs6.3bn) and Adj. PAT at Rs4.2bn (vs Rs3.8bn) US business was up by 16 percent yoy on strong growth of 34 percent yoy in generic business; Branded business declined by 48 percent due to low sales in Antara and none in AerochambersGoing forward, Lupin will continue to see high value launches like Niaspan in US; India business is also expected to claw back to higher growth rates in FY15EWe believe Lupin continues to offer growth opportunity in the large cap pharma space. We maintain BUY on the stock with a revised Target Price of Rs 996 (22x FY15E EPS of Rs 45.3)Havells India
Strong comeback; Retain Buy30 percent beat to earnings forecasts - Revenue +22 percent yoy to Rs 11.7bn, EBIDTA margin up 200bps to 14.4 percent and APAT +45 percent yoy to Rs 1.3bnReports highest EBIDTA margins at 14.4 percent, up 200 bps yoy, driven by lower advertisement spends & higher contribution marginsSylvania recovery remains elusive; revenue decline 2.6 percent yoy to €107mn, EBIDTA margin dips 40bps yoy to 2.9 percent and Net loss of €1.6mnHavells guides for revenue growth of 11-12 percent and EBIDTA margins of 13-14 percent in FY14E; Conviction intact - Retain Buy, TP Rs 770.Bharti Airtel
Good show, Retain ACCUMULATERevenue at Rs213bn (+5.1 percent qoq), EBITDA at Rs 68.3bn (+4.4 percent qoq) with EBITDA margin at 32 percent (flat qoq). PAT at Rs5.1bn was down 26 percent qoq, impacted by higher finance charges and tax outgoDomestic wireless revenue decline was in-line with estimate; however Enterprise segment revenue was better than expected. Africa revenue growth of 5.4 percent qoq in USD terms surprised positivelyDomestic wireless rev. is expected to driven by tariff improvement along with continued voice traffic and data growth. Sustainability of stable pricing in Africa holds keyRaise our FY14E/15E EBITDA estimates by 2 percent/2.6 percent on the back of Q2 beat. Maintain Accumulate with target price of Rs 400Grasim Industries
Encouraging signsGrasim delivered encouraging performance with Stnd EBITDA at Rs2.6bn (-10 percent yoy) coming in significantly above estimate (Rs2.2 bn) led by higher VSF realisations. VSF EBITDA/kg at Rs25.8/kg, above est of Rs22.5/kg Higher other income & lower tax fuel APAT beat (Rs3.9 bn vs estimate of Rs2.5 bn. Lower Cement profitability (Ultratech EBIDTA -34 yoy) drag Conso EBIDTA to Rs9.8 bn - 27 percent yoy Multiple triggers ahead 1) VSF margins showing signs of improvement 2) Grasim nearing completion of Vilayat plant 3)Entry into specialty fibres to de-commoditize viscose bizRetain BUY, Grasim a classic bottom out play with 16 percent VSF EBIDTA CAGR over FY13-15E. Stock at compelling value proposition with ~50 percent holdco discount & ~1X P/B on FY15EMahindra Holidays and Resorts IndiaMHR adds 2416 members (net) in the quarter, ~ 10 percent below our expectations, but higher realisations, due to member upgrades, leads to lower disappoint on estimationsTRAI circular has reduced the sales touch points by ~50 percent. MHR plans to mitigate the same by re-branding, entering new geographies and Pull strategy from word of mouth Jump in membership upgrades states the improvement in customer satisfaction levels, and hence increases the potential of 'referrals' as a strong sales channelWe maintain our Accumulate rating and TP of Rs 250 along with member addition target of 13,000 for FY14E and 15,000 for FY15E. 
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