Brokerage Recommendations
Sunidhi calls a ‘Buy’ on Kovai Medical Centre
CMP: Rs. 162 Target Rs. 225
Q2FY13 & H1FY13 Results: During Q2FY13, net profit climbed 51% to Rs 5.8 crore on 40% higher revenue of Rs 75 crore. OPM and NPM stood at 25.4% and 8.0% Vs 22.3% and 7.2% respectively in Q2FY12. EPS for Q2FY13 stood at Rs 5.3 Vs Rs 3.5 in Q2FY12. During H1FY13, net profit rose 50% to Rs 9.4 crore on 37% higher sales of Rs 143 crore. OPM and NPM stood at 24.6% and 6.5% Vs 20.9% and 6.0% respectively in H1FY12. EPS for H1FY13 stands at hefty Rs8.6 as against Rs 5.3 in H1FY12. During FY12, net profit fell 1.2% to Rs 12 crore on 27% higher revenue of Rs 222 crore. EPS stood at Rs 11.0. A dividend of 12.5% was paid.
Prospects: The health care economy is generally resilient and is not impacted by recessions. Even though the world economy is weak, the health care industry has remained largely insulated. The Indian healthcare industry is estimated to be valued at Rs 2.8 trillion in size in FY11, growing at a 5 year CAGR of 13.1% p.a.
CARE Research estimates healthcare industry has the potential to almost double to Rs 5 trillion over the next five years, implying a growth rate of 12% p.a.
Medical Tourism: Medical tourism is one of the foremost external drivers that fuel the growth of health care industry. Medical Tourismin India is expected to experience an annual growth rate of 30%.
Valuation & Recommendation: KMCH is now expanding its service to all other medical segments to shore up the revenue. In recent times KMCH is very aggressive in bringing new technologies, most modern facilities and new departments to its fold. KMCH has plans to open new satellite centers in other places, which would enhance revenue further going forward.
At the CMP of Rs160, the share is trading at a P/E of 8.9x on FY13E and 7.3x on FY14E. The average P/E for the healthcare industry currently hovers at staggering 42.0. This provides ample opportunity for KMCH shares to rise smartly on strong fundamentals. We recommend BUY with a target of Rs 225 in the medium term.
R K Global calls a ‘Hold’ on Nestle India
CMP: Rs. 4800 Target Rs. 5129
Nestle India Ltd, reported revenues lower than our estimates. The company delivered lower than expected revenue growth of ~8% to Rs 21,241 mn (lower than Rs 25,029 mn, what we have forecasted; ~18% below our estimates). Domestic sales was impacted by portfolio/channel optimization and pricing for value in few products. Exports grew ~10% YoY to Rs 900 mn with rupee depreciation favorably impacting exports. Owing to additional capacities from Tahliwal factory, we had factored for volume growth on augmented portfolio.
Company’s net revenue for Q3CY’12 have increased by ~8% YoY to Rs 21,241 mn. Net domestic sales increased by ~8% to Rs 20,206 mn mainly on account of better net realization and product mix. Domestic sales growth is just ~8% and has been impacted by portfolio/channel optimization and pricing for value in certain products. The export sales inclined by ~10% to Rs 949 mn. Exports to third parties have grown by ~30% while Exports to affiliates has declined by ~5%. Rupee depreciation has favorably impacted the total exports growth by ~12%. The OPM was almost stagnant at ~20.9%. The net profit has increased by just ~2% to Rs 2,673 mn due to rise in deprecation cost. The OPM was almost stagnant at ~20.9%. There was rise in employee cost by ~40bps to ~8% and other expenses by ~90bps to ~25.6% which was offset by fall in raw material cost by ~50 bps to ~43.2% and purchase of traded goods by ~40bps to ~1.4% of adjusted net sales.
The company has completed close to Rs 25,000 mn manufacturing expansion and is distributing products to 4 mn outlets. The company stands by its strategy of a long term sustainable profitable growth; however, still challenging as domestic economy remains sloth, competition from me-too products is high. This Q’s result gives a very vivid idea of demand moderation. Rationalization, channel prioritization, focused innovations and NCE implementation and strength of brands remain key positives.
Nestle’s brand equity and market position and remain positive on the long term prospects of the company but present momentum doesn’t looks promising. Maintain HOLD with a refined TP of Rs 5,129 (a potential ~8% return from CMP) with a WAIT-TO-EVEOLVE policy. The stock trades at a P/E and P/BV of ~34.1x & ~14.5x respectively. Our TP is arrived at a P/E of ~36.9x and a P/BVPS of ~15.7x of CY’13E EPS of Rs 139 and BVPS of Rs 326.
CMP: Rs. 162 Target Rs. 225
Q2FY13 & H1FY13 Results: During Q2FY13, net profit climbed 51% to Rs 5.8 crore on 40% higher revenue of Rs 75 crore. OPM and NPM stood at 25.4% and 8.0% Vs 22.3% and 7.2% respectively in Q2FY12. EPS for Q2FY13 stood at Rs 5.3 Vs Rs 3.5 in Q2FY12. During H1FY13, net profit rose 50% to Rs 9.4 crore on 37% higher sales of Rs 143 crore. OPM and NPM stood at 24.6% and 6.5% Vs 20.9% and 6.0% respectively in H1FY12. EPS for H1FY13 stands at hefty Rs8.6 as against Rs 5.3 in H1FY12. During FY12, net profit fell 1.2% to Rs 12 crore on 27% higher revenue of Rs 222 crore. EPS stood at Rs 11.0. A dividend of 12.5% was paid.
Prospects: The health care economy is generally resilient and is not impacted by recessions. Even though the world economy is weak, the health care industry has remained largely insulated. The Indian healthcare industry is estimated to be valued at Rs 2.8 trillion in size in FY11, growing at a 5 year CAGR of 13.1% p.a.
CARE Research estimates healthcare industry has the potential to almost double to Rs 5 trillion over the next five years, implying a growth rate of 12% p.a.
Medical Tourism: Medical tourism is one of the foremost external drivers that fuel the growth of health care industry. Medical Tourismin India is expected to experience an annual growth rate of 30%.
Valuation & Recommendation: KMCH is now expanding its service to all other medical segments to shore up the revenue. In recent times KMCH is very aggressive in bringing new technologies, most modern facilities and new departments to its fold. KMCH has plans to open new satellite centers in other places, which would enhance revenue further going forward.
At the CMP of Rs160, the share is trading at a P/E of 8.9x on FY13E and 7.3x on FY14E. The average P/E for the healthcare industry currently hovers at staggering 42.0. This provides ample opportunity for KMCH shares to rise smartly on strong fundamentals. We recommend BUY with a target of Rs 225 in the medium term.
R K Global calls a ‘Hold’ on Nestle India
CMP: Rs. 4800 Target Rs. 5129
Nestle India Ltd, reported revenues lower than our estimates. The company delivered lower than expected revenue growth of ~8% to Rs 21,241 mn (lower than Rs 25,029 mn, what we have forecasted; ~18% below our estimates). Domestic sales was impacted by portfolio/channel optimization and pricing for value in few products. Exports grew ~10% YoY to Rs 900 mn with rupee depreciation favorably impacting exports. Owing to additional capacities from Tahliwal factory, we had factored for volume growth on augmented portfolio.
Company’s net revenue for Q3CY’12 have increased by ~8% YoY to Rs 21,241 mn. Net domestic sales increased by ~8% to Rs 20,206 mn mainly on account of better net realization and product mix. Domestic sales growth is just ~8% and has been impacted by portfolio/channel optimization and pricing for value in certain products. The export sales inclined by ~10% to Rs 949 mn. Exports to third parties have grown by ~30% while Exports to affiliates has declined by ~5%. Rupee depreciation has favorably impacted the total exports growth by ~12%. The OPM was almost stagnant at ~20.9%. The net profit has increased by just ~2% to Rs 2,673 mn due to rise in deprecation cost. The OPM was almost stagnant at ~20.9%. There was rise in employee cost by ~40bps to ~8% and other expenses by ~90bps to ~25.6% which was offset by fall in raw material cost by ~50 bps to ~43.2% and purchase of traded goods by ~40bps to ~1.4% of adjusted net sales.
The company has completed close to Rs 25,000 mn manufacturing expansion and is distributing products to 4 mn outlets. The company stands by its strategy of a long term sustainable profitable growth; however, still challenging as domestic economy remains sloth, competition from me-too products is high. This Q’s result gives a very vivid idea of demand moderation. Rationalization, channel prioritization, focused innovations and NCE implementation and strength of brands remain key positives.
Nestle’s brand equity and market position and remain positive on the long term prospects of the company but present momentum doesn’t looks promising. Maintain HOLD with a refined TP of Rs 5,129 (a potential ~8% return from CMP) with a WAIT-TO-EVEOLVE policy. The stock trades at a P/E and P/BV of ~34.1x & ~14.5x respectively. Our TP is arrived at a P/E of ~36.9x and a P/BVPS of ~15.7x of CY’13E EPS of Rs 139 and BVPS of Rs 326.
No comments:
Post a Comment