Reliance Results in Graphs. I think this is the best way to view these things.
Revenues are up, Profits are down.
Results
PIRHEALTH Q2 At 52.93 cr.
Piramal Healthcare announced Q2 results and they’ve made about Rs. 53 cr. in profits in the quarter.
Click for a larger image. All amounts in Lakhs except EPS and Face Value.
I know, hardly anyone gives you eight or nine quarters but honestly that’s how you need to look at a business (quarterly) or longer term (yearly – many years).
The Cash
In Q2 last year they got a fantastic payout of 16,000 cr. for the business they sold to Abbott, so we can’t easily compare results.The operational profit was 51 cr, versus a 57 cr. loss last year. They have a net interest earning of 30 cr. and nearly 33% tax rate. Interest seems awfully small for a portfolio of over 10,000 cr. now – but it could be deployed in debt funds (rather than fixed deposits) which means they get it as a lumpsum if they exit. Of concern is the balance sheet though, which shows:
a) Investments: 3,917 cr.
b) Other current assets: 6110 cr.
c) Cash and bank: 735 cr.
This is scary because all that money needs to either be in Fixed Deposits (FDs) – which one might call “other current assets”. But in that case interest income should be huge: At 9% rates, the minimum they’ll earn in a quarter is Rs. 130 cr. – they earned just 50 cr. And if it’s in short term debt funds, the figure should show in “investments”. This needs further investigation.
Update: I was mistaken about 10,000 cr. in cash. They are getting about 1850 cr. per year, but they got an upfront amount of 10,000 cr. Since they've got one tranche, the amounts they have is:
Upfront: 10,000 cr.
1st Tranche: 1850 cr.
Vodafone deal: (2900 cr)
Buyback: (2500 cr.)
Taxes: (3700 cr.)
Indiareit buy + dividend payout : (400 cr.)
That should leave 2,500 cr. or whereabouts with them, for which the quarterly interest will be just Rs. 50 cr or so, at 9% an annum. So that bit has been clarified.
Thanks to sharp reader Jagadees for the heads up!
On the business front
They grew pharma solutions (CRAMS) to 305 cr. from 230 cr., (32%) the critical care business to 92 cr. from 64 cr. (64%), and OTC/Opth products to 57 cr from 36 (59%) Overall
But most of the profit is from forex gains, which is a gain of Rs. 103 cr.in the quarter, due to receivables from Abbott. Abbott is paying them around 1,900 cr. per year (they’ve got one). That means the operational business is largely loss making to the extent of about 50 cr.
Taxes are 33% – the highest in 8 or 9 quarters. They’ll buy losses soon, so that will taper down. But they’ve taken on more debt (why?) scaling up to 1090 cr. from March’s 757 cr.
Prospects
They will soon merge the R&D division of Piramal Life Sciences, which is also loss making, but should improve prospects for deploying cash in the future. They’ve bought about 5% in Vodafone and are making forays into financial services, on which I don’t currently have an opinion. They have received approval to sell Sevoflurane (which is for general anaesthesia in surgeries) in Europe – note that this may not be a huge market.
With that they still have a EPS of 3.1 and a TTM EPS of about Rs. 20 – putting the share at Rs. 355 at a P/E of about 18. But remember they own cash of around 10,000 cr. which is more than Rs. 500 per share, apart from the business itself.
Disclosure: I own shares. The share’s at 350 (my purchase price is around 400) and I was hoping to buy more, but I’m not too impressed with these results. There are areas where I am concerned about transparency and figures don’t match between their own presentations and what they send to exchanges.
HDFCBANK Q2 Through the Roof, 30% EPS Growth
In another magnificent display HDFC Bank takes its EPS up 30% in what others would call a tough environment.
The stock was up 3% on a very smart rally in the markets, and ended at Rs. 492, for a P/E of around 26.
Net NPAs are just 0.2% of assets, they say, at Rs. 355 cr. And their Capital Adequacy is at 16.5%, a decent number. Most profits (957 cr.) came in from retail banking (lending plus fees minus deposit costs, plus any credit card numbers I guess) Wholesale banking adding 670 cr. and treasury pitched in with 39 cr. (though higher than the 18 cr. last quarter and a loss of 52 cr. last year).
There’s not much about losses from loans out there; so interest rate increases are getting passed on (I suppose). There are no relevant subsidiaries (HDFC Mutual fund and Insurance are owned by HDFC Bank’s parent, HDFC Limited). Will add more to this post after them interviews.
TCS Q2 EPS Up just 6%, Revenues up 25%
TCS Results yesterday were not spectacular and the stock went down more than 8%. A quick look at the financials:
In comparison with Infosys, TCS has a higher revenue growth curve while profits have fallen:
And then, their EPS Growth
TCS which was doing so much better till the last quarter, has noticably dipped below Infy.
The TCS stock at 1040 is at a 21 P/E, which is about the same you pay for an Infosys at 2723 (P/E of 21.5).
(See the Infy result analysis – a far more detailed one)
Hero MotoCorp Q2 EPS up 19%
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Written on October 19th, 2011 by Deepak Shenoy
Categories: HeroHonda, Results, Sep2011
Categories: HeroHonda, Results, Sep2011
Hero MotoCorp (earlier Hero Honda) has announced decent results with a revenue growth of 28%, and EPS growth of 19.39%.
After a slowdown of sorts in the 2010 timeframe, growth has come back. The company is reasonably valued – at the price of Rs. 2085, they get a P/E of 20, which is close to their EPS growth. The trailing twelve month (TTM) EPS hasn’t grown much though, a matter of concern.
Disclosure: I have long positions.
Reliance Q2 Results: Good, Not Great
After a reasonable performance by Infosys, Reliance has provided a decent set of numbers. Reliance has the highest weight of any stock in both the Sensex and the Nifty.
I’ll do this through a lot of charts. Not only is text less intuitive, the graphs provide a far better frame of reference.
TTK Prestige Grows EPS 55% in Sep 2011
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Written on October 10th, 2011 by Deepak Shenoy
Categories: Results, Sep2011, Stocks, TTKPrestige
Categories: Results, Sep2011, Stocks, TTKPrestige
TTK Prestige threw in a fantastic set of results today, with 55% EPS growth, and 51% revenue growth, year on year.
The stock closed up 7% at 2818.
The chart has shown signs of peaking. I have no positions anymore, as I exited on a sharp reversal around 2650. But the stock might be worth picking up if it breaks through the key levels I’ve talked about. It’s already through the 50DMA on good volume, a positive sign.
Interestingly, the forward P/E of this company is still around 30, while it grows EPS more than 50%. It’s a highly priced stock but apparently, not high enough. But given the recent volatility – it’s corrected 20% – I would not take a large position; the stop loss has to be the 200 DMA.
Sintex Drops EPS 61% on FCCB Losses
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Written on October 10th, 2011 by Deepak Shenoy
Categories: Results, Sep2011, Sintex, Stocks
Categories: Results, Sep2011, Sintex, Stocks
Sintex announced results post market hours, at 3:45 pm today. While revenues are up 25% to 1154 cr., the net profit has dropped 61% to just 38 cr. from 101 cr. Much of this loss was due to Foreign Currency Convertible Bonds (FCCBs) based losses. Companies that borrow through FCCBs (in foreign currency) have to make an allowance for the exchange rate changes. A fall in the rupee means they have to pay more in rupees than earlier and this is considered a loss.
At the current price of Rs. 115, the P/E comes to 8.1, which isn’t very expensive.
FCCBs: Sintex issued $225m of FCCBs in 2008, payable or convertable in 2013. The conversion price is Rs. 247, said their group president, Sunil Kanojia. The yield is 5.2% which means a total payment of $290M in 2013, which at today’s USD-INR price amounts to Rs. 1450 cr. Including this, their total debt is 2900 cr.
It might be noted that Sintex has 25% higher revenues and FCCB losses are “exceptional items”. In fact Sintex’s press release embodies that fact:
But since Sintex has revenues in Europe and the US their revenues would go up in rupees simply because of the exchange rate – so some of the higher revenue in rupees also comes from the higher exchange rate.
Fundamentally, this stock doesn’t show great signs, though I’ve heard of a few people looking to “buy on dips”. (I think that’s a dangerous term)
The stock has declined a lot, so it’s not a great technical buy either:
Perhaps there needs to be serious strength – beyond the 160 high – for a purchase to be worthwhile.
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