Stocks To Buy & Sell After Q4FY15 Results: Amar Ambani Of IIFL

Glenmark Pharmaceuticals (Q4 FY15) – BUY CMP Rs861, Target Rs1,000, Upside 16.2% Revenues, margin in line but PAT marred by one off settlement claim in US US portfolio is set for strong rebound on back of key upcoming launches including Zetia Revise estimates but maintain conviction BUY with fresh 9-12mth target of Rs1,000

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Indian Hotels (Q4 FY15) – Accumulate CMP Rs101, Target Rs110, Upside 8.8% Sluggish demand environment, supply growth lead to modest 5.7% yoy rise in standalone Q4 revenues Q4 and FY15 margins under pressure on the back of negative operating leverage headwind Lackluster performance likely to continue until ARRs, occupancies show traction; retain Accumulate

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Reliance Communications (Q4 FY15) CMP Rs66, Target Rs70, Upside 6.5% Q4 revenues at +4.8% qoq ahead of estimate on sequential growth in India and global operations India traffic growth up robust 4.5% qoq while voice pricing declines; India EBIDTA margin fell 60bps qoq while Global EBIDTA margin jumps ~850bps qoq Lacks near term triggers would potentially restrict stock upside; retain Accumulate with revised 9-12mth target of Rs70

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National Aluminium Co Ltd (Q4 FY15) – BUY CMP Rs48, Target Rs62, Upside 26.5% NALCO’s operational numbers were lower than our estimate due to lower external alumina sales Alumina sales volume declined 24% yoy due to delay in shipment and higher internal consumption Aluminium production improved by 7.8% yoy due to improving coal supply Operating profit of Rs4.3bn was lower than our estimate due to a miss in alumina sales Alumina sales to drive earnings; Maintain BUY with a price target of Rs62

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Kalpataru Power Transmission Ltd (Q3 FY15) – Accumulate CMP Rs222, Target Rs240, Upside 8.1% KPTL’s standalone results were disappointing on account of 7% decline in revenue The decline in topline was largely due to shrinking order book and a miss in execution in the Transmission & Distribution (T&D) space Margins improved marginally by 33bps to 9.8%, lower than our estimate Order inflow at Rs. 845cr in Q4 FY15 was largely on account of orders in the T&D space and from the MENA region. The company is also L1 in orders worth Rs. 2,000cr Management remained confident of delivering margins above 10% in FY16 and 15% growth in topline for the standalone entity Near term earnings to remain subdued; Maintain Accumulate with a price target of Rs240

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Indraprastha Gas (Q4 FY15) – BUY CMP Rs400, Target Rs500, Upside 25.0% Net sales at Rs. 917cr were lower than estimates owing to weaker than expected CNG and PNG volumes CNG volumes at 200mn kgs were higher by 4.5% yoy but declined 2% qoq. PNG volumes were at 79scm a fall of 13.4% yoy and 4.1% qoq Gross margins/unit improved by 9.1% yoy and 0.5% qoq to Rs11.2/unit. This was in line with our expectations OPM at 19.2% came in lower than our expectations and was lower by 67bps yoy and 115bps qoq Maintain BUY with a price target of Rs500

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ONGC (Q4 FY15) – BUY CMP Rs328, Target Rs400, Upside 22.0% Net sales rise 1.6% yoy and 14.4% qoq owing to higher net realizations of crude oil Discount on crude oil was nil for the quarter as compared to US$73.9/bbl in Q4 FY14 and US$40.4/bbl in Q3 FY15 Natural gas realization was at Rs12,096/tscm v/s Rs10,358/tscm in Q4 FY14 For Q4 FY15 upstream contribution towards under recoveries was nil We maintain our BUY rating with a 9-12 months target price of Rs400 as higher net realizations for the standalone entity will offset the impact of lower realizations on JV and OVL production

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NMDC Ltd (Q4 FY15) – Accumulate CMP Rs131, Target Rs136, Upside 4.1% Higher than expected sales volume lead to an outperformance in topline Sales volume were lower by 18.3% yoy due to lower demand; Production decreased 19.5% yoy to 7.9mn tons Operating profit of Rs. 1,421cr was lower than our estimate of Rs. 1,530cr due to higher other expenditure NMDC has decreased its lump ore prices by Rs. 950/ton and fines prices by Rs. 400/ton during the quarter Iron ore prices have corrected sharply over the last two months due to increase in supply from imports and higher domestic production Earnings cut on lower volumes and lower realisations; Maintain Accumulate with a revised price target of Rs136

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Hindalco Industries Ltd (Q4 FY15) – Reduce CMP Rs132, Target Rs125, Downside 5.1% Hindalco’s standalone operating performance was marginally lower than our estimate due to weaker performance of aluminium division The impact of higher than expected copper EBIT was offset by weaker aluminium EBIT Company registered its best ever quarterly production for both, copper and aluminium Aluminium sales volume growth was also boosted by some liquidation of previous quarter inventory Copper business EBIT remained strong on the back of rising Tc/Rc margins and an improvement in by-product credits Near term earnings to remain subdued due to high power costs; Maintain reduce rating with a price target of Rs125

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Balrampur Chini Mills (Q4 FY15) – Reduce CMP Rs44, Target Rs40, Downside 7.4% Vast gap between cost of cane and sugar prices continues to make sugar operations unviable; Q4 sugar realization down 9.4% yoy Distillery volumes decline offset by better pricing; overall PAT down 60% yoy Cane price reform remains the key catalyst to watch out; retain Reduce rating and revised 9-12mth target of Rs40

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GAIL (India) Ltd (Q4 FY15) – REDUCE CMP Rs381, Target Rs360, Downside 5.5% Net sales fall 2% yoy to Rs. 14,271cr in line with our expectations; revenues were higher for all segments except LPG & Liquid Hydrocarbon segment Gas transmission volumes fall 9.3% yoy as gas production volumes declined from KG-D6 and PMT blocks. Gas trading volumes also fell by 9.6% yoy OPM at 4.5% was substantially below our and street estimates on back of substantial jump in other expenditure Petrochemical segment reported a negative EBIT of Rs. 154crs as while polymer prices declined in line with crude oil price decline, its feedstock price (R-LNG) was higher We maintain our Reduce rating on the stock with a revised price target of Rs. 360

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Coal India (Q4 FY15) – Accumulate CMP Rs383, Target Rs412, Upside 7.5% Coal India’s operational performance was better than expected due to higher FSA prices and higher revenues from by-products Blended realisations were higher than expected even after the sharp correction in e-auction and washed coal prices During the quarter, coal production was higher by 6.2% yoy and dispatches were higher by 3.9% yoy Operating profit of Rs. 5,965cr was higher than expected due to higher contribution from by-product sales and higher than expected increase in FSA prices Proxy play on the reform story; Recommend Accumulate with a revised price target of Rs412

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United Spirits (Q4 FY15) – Reduce CMP Rs3,485, Target Rs3,200, Downside 8.2% Net sales improve 5.6% yoy on lower excise duty and higher other operating income; gross revenues declined 3% yoy Encouragingly, gross margin improves 480bps yoy though write offs and provisions still remain an overhang on profitability Remain +ve on potential business turnaround but earnings have to play catch up to justify lofty valuation; retain Reduce with unchanged 9-12mth target price of Rs3,200

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