Emkay calls a ‘Buy’ on Piramal Glass
CMP: Rs. 103 Target Rs. 155
Q4FY12 were in line expectations – revenues grew 22.8% yoy to Rs 4.0bn, EBIDTA grew 6.3% yoy to Rs 849mn and APAT grew 17.3% yoy to Rs 384mn. Premium segment continues to drive growth in C&P, while domestic sales growth in USA and Sri Lanka fuels SF&B segment. To remain key growth drivers over FY13-FY14E 160TPD Greenfield capacity operational, but high energy costs, stabilization time and suboptimal product mix to dent. EBIDTA margins in FY13E; Expect improvement in FY14E. Revise FY13E estimates following change in revenue and EBIDTA guidance by management. Maintain BUY with target price of Rs155/Share
Results in line with expectations: After adjusting for M-T-M forex losses of about Rs 133mn, PGL results were in line with our expectations on all counts. PGL reported revenue growth of 22.8% yoy to Rs 4.0bn led by strong growth of 31% in SF&B segment and 21% yoy growth in C&P segment. Pharma segment also witnessed growth of 11% yoy during the quarter. Core EBIDTA grew 6.3% yoy to Rs 849mn with EBIDTA margins contracting by 320bps yoy to 21%, being lower than expectations. Fall in EBIDTA margins was due to high raw material and energy cost. APAT grew 17.3% yoy to Rs 384mn largely due to restating in interest cost. For FY12, revenues grew 13.5% to Rs 14.0bn, while EBIDTA rose 9.3% to Rs 3.3bn and APAT rose 3% yoy to Rs 959mn. Higher domestic sales in USA and Sri Lanka propels SF&B segment: This quarter saw SF&B segment outpacing C&P segment on growth terms, with SF&B segment posting 31% yoy growth to Rs 1.1bn, largely led by robust growth in domestic markets of USA and Sri Lanka. However, on the cost side, Sri Lanka operation was impacted by high energy prices. Contribution of SF&B to revenues improved to 27% in Q4FY12. For FY12, the contribution of SF&B to revenues stood at 25%. Forecasting strong growth in SF&B market, PGL is investing about Rs 200mn in upgrading its SF&B line and shifting the decoration facility near the furnace, to propel revenue growth in SF&B segment.
Forex losses impact quarter, Revenue growth guidance positive; Maintain BUY with TP of Rs 155: Barring forex loss of Rs 133mn on account of M-T-M losses, PGL numbers were in line with expectations. Revenue growth was healthy led by SF&B segment and Premium C&P segment, but rising input cost and energy prices impacted EBIDTA margins. New facility has commenced operations and is expected to contribute 7-8% revenues from FY13E, but sub-optimal product mix, stabilization time would stem EBIDTA margins in FY13E. We believe Premium C&P and SF&B segment would continue to be the key growth drivers for PGL and would help achieve its guided 20-21% revenue CAGR for FY11-FY13E period. We maintain our BUY rating on PGL with target price of Rs 155/Share, which translates into 4.7x FY14E EV/EBIDTA.
Centrum calls a ‘Buy’ on Great Eastern Shipping
CMP: Rs. 245 Target Rs. 288
Great Eastern Shipping’s (GE Shipping) Q4FY12 results were better than expectations. While higher revenue led to better EBITDA and margins, lower depreciation and profit from sale of ships led to higher-than-expected profitability. Movement in foreign currency led to restatement of dollar denominated loans and in accordance with AS-16 Rs341mn was accounted for in interest cost during Q4 (Rs1,290mn for FY12). We have marginally raised our revenue estimates to factor in the depreciation in Re vs USD. However, freight rates are likely to remain under pressure and impact margins going ahead. The company is focused on growing its offshore business under Greatship (India), and has an order book of four vessels, including a 350-foot jack-up rig. Maintain Buy but with a lower target price to Rs288 on our revised estimates.
Q4 results better: Consolidated revenue grew 36.7% YoY to Rs8,223mn, 11.2% above our estimate. EBITDA grew 10.1% YoY to Rs2,578mn, also 9.9% above our estimates; however, PAT (adjusted for impairment loss) at Rs592mn, was down 38.7% YoY. Shipping revenue increased 14.2% YoY to Rs4,862mn on the back of higher revenue days. Offshore revenues grew 45.4% YoY to Rs3,404mn.
Declining freight rates add pressure on margins: Consolidated EBIDTA margins declined 757bp YoY and 332bp QoQ to 31.3%. Though offshore EBIT remained flat up 1.8% YoY to Rs781mn, its margins declined 983bp YoY to 22.9%. Shipping EBIT (adjusted for impairment) was also flat, down just 0.2% YoY to Rs988mn, while its EBIT margins too declined 293bp YoY to 20.3%.
Maintain Buy, target price lowered to Rs 288: We continue to value GE Shipping on sum-of-the-parts (SOTP) basis on FY14. While we have valued the shipping business at Rs 256/share (0.7x FY14 standalone BV), we value offshore business at Rs 32/share (6.5x FY14E EBITDA) to arrive at our revised target price of Rs288. The company’s standalone NAV at the end of Q4 was down 20.9% YoY and 4.2% QoQ to Rs 273.