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Ipca Labs, Suzlon Energy, McLeod Russel & Cravatex

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IPCA LABS
Reco price/date: Rs 324 /May 30;
Current/target price: Rs 328/Rs 400
Ipca Laboratories revenues were below estimates on account of degrowth of Europe due to packaging issues. Its Ebitda margins stood at 19.9 per cent, as against 20.5 per cent in Q4 FY11, lower than analysts’ estimate of 22.4 per cent. Profits grew 12 per cent to Rs 76 crore, after accounting for a forex gain of Rs 5 crore. Lower US revenues and higher R&D will impact FY13. Karvy has downgraded earnings estimates of for FY13 by 5.6 per cent to Rs 27 per share, owing to higher interest cost in lieu of ECB. Maintain Buy.

Karvy Stock Broking

SUZLON ENERGY
Reco price/date: Rs 21/May 28;
Current/target price: Rs 20/Rs 20
Net loss of Rs 480 crore for FY12, much higher than expectations. The group’s order book remained flat sequentially, with 5.7 gw of orders valued at Rs 41,500 crore. Its gearing ratio of 2.15 times as of end-March is at an all-time high. Suzlon needs another $300 million to meet its FY13 debt repayments. FY13 Ebit margin guidance of six per cent is lower than expectations. The stock is trading at a high premium to the average peer group on CY12 estimated price/earnings, which analysts believe is not justified, given the debt overhang. Maintain Underweight.

HSBC Global Research

MCLEOD RUSSEL
Reco price/date: Rs 280/May 30;
Current/target price: Rs 275/Rs 302
McLeod Russel’s Q4FY12 and FY12 consolidated numbers were in line with analysts’ estimates. The company reported a top line growth of 13 per cent y-o-y, along with Ebitda growth of seven per cent. On the net profit front, the company reported growth of 17 per cent. The Ebitda margin, for the year as a whole, came in at 26.9 per cent, a tad lower than estimates due to slightly lower sales from its Indian operations. Going forward, the company is likely to report top line growth of 12.7 per cent y-o-y in FY13E, largely led by an increase in sales realisation and slightly higher output from international operations. It is likely to report an increase in net profit to the tune of 12.4 per cent y-o-y in FY13. Downgrade to Neutral from Overweight.

HSBC Global Research

CRAVATEX
Reco price/date: Rs 658/May 28;
Current/target price: Rs 583/Rs 771
For Q4 FY12, Cravatex’ top line grew 164 per cent y-o-y and came in at Rs 60 crore, higher than analysts’ estimates, mainly on account of healthy growth of 130 per cent in domestic sales and additional sales under the sub-license acquired from FILA. The Ebitda came in at Rs 3.2 crore. Margins improved marginally by nine basis points on a sequential basis to 5.25 per cent. Profit for the quarter stood at Rs 1.21 crore, slightly lower than analysts’ estimates of Rs 1.3 crore. Maintain Buy.

Angel Broking

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Analysts' corner

Ipca Labs, Suzlon Energy, McLeod Russel & Cravatex

Ipca Laboratories revenues were below estimates on account of degrowth of Europe due to packaging issues. Its Ebitda margins stood at 19.9 per cent, as against 20.5 per cent in Q4 FY11, lower than analysts’ estimate of 22.4 per cent. Profits grew 12 per cent to Rs 76 crore, after accounting for a forex gain of Rs 5 crore. Lower US revenues and higher R&D will impact FY13. Karvy has downgraded earnings estimates of Ipca Labs for FY13 by 5.6 per cent to Rs 27 per share, owing to higher interest cost in lieu of ECB. Maintain Buy.

IPCA LABS
Reco price/date: Rs 324 /May 30;
Current/target price: Rs 328/Rs 400
Ipca Laboratories revenues were below estimates on account of degrowth of Europe due to packaging issues. Its Ebitda margins stood at 19.9 per cent, as against 20.5 per cent in Q4 FY11, lower than analysts’ estimate of 22.4 per cent. Profits grew 12 per cent to Rs 76 crore, after accounting for a forex gain of Rs 5 crore. Lower US revenues and higher R&D will impact FY13. Karvy has downgraded earnings estimates of Ipca Labs for FY13 by 5.6 per cent to Rs 27 per share, owing to higher interest cost in lieu of ECB. Maintain Buy.

Karvy Stock Broking

SUZLON ENERGY
Reco price/date: Rs 21/May 28;
Current/target price: Rs 20/Rs 20
Net loss of Rs 480 crore for FY12, much higher than expectations. The group’s order book remained flat sequentially, with 5.7 gw of orders valued at Rs 41,500 crore. Its gearing ratio of 2.15 times as of end-March is at an all-time high. Suzlon needs another $300 million to meet its FY13 debt repayments. FY13 Ebit margin guidance of six per cent is lower than expectations. The stock is trading at a high premium to the average peer group on CY12 estimated price/earnings, which analysts believe is not justified, given the debt overhang. Maintain Underweight.

HSBC Global Research

MCLEOD RUSSEL
Reco price/date: Rs 280/May 30;
Current/target price: Rs 275/Rs 302
McLeod Russel’s Q4FY12 and FY12 consolidated numbers were in line with analysts’ estimates. The company reported a top line growth of 13 per cent y-o-y, along with Ebitda growth of seven per cent. On the net profit front, the company reported growth of 17 per cent. The Ebitda margin, for the year as a whole, came in at 26.9 per cent, a tad lower than estimates due to slightly lower sales from its Indian operations. Going forward, the company is likely to report top line growth of 12.7 per cent y-o-y in FY13E, largely led by an increase in sales realisation and slightly higher output from international operations. It is likely to report an increase in net profit to the tune of 12.4 per cent y-o-y in FY13. Downgrade to Neutral from Overweight.

HSBC Global Research

CRAVATEX
Reco price/date: Rs 658/May 28;
Current/target price: Rs 583/Rs 771
For Q4 FY12, Cravatex’ top line grew 164 per cent y-o-y and came in at Rs 60 crore, higher than analysts’ estimates, mainly on account of healthy growth of 130 per cent in domestic sales and additional sales under the sub-license acquired from FILA. The Ebitda came in at Rs 3.2 crore. Margins improved marginally by nine basis points on a sequential basis to 5.25 per cent. Profit for the quarter stood at Rs 1.21 crore, slightly lower than analysts’ estimates of Rs 1.3 crore. Maintain Buy.

Angel Broking

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