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July 31, 2015

Q1 FY16 Updates - TFCIL, Yes Bank, JSW Steel & Vedanta

TFCIL Ltd. (Q1 FY16) – BUY
CMP Rs58, Target Rs82, Upside 43.0%
  • Growth in Q1 FY16 was weak as expected; company remains confident of healthy assets expansion in FY16
  • NIM to remain steady in the longer term
  • Asset quality performance was resilient again
  • Retain Buy rating and 12-month price target to Rs82
Click here for the detailed report on the same.
Yes Bank (Q1 FY16) – BUY
CMP Rs816, Target Rs1,005, Upside 23.2%
  • Loan growth was surprisingly sustained at robust 36% yoy; mix moved back towards Corporate Banking
  • Deposit franchise continues to improve; CASA crosses 23%
  • NIM improvement was a pleasant surprise; outlook is strong too
  • Trend in non-interest income growth disappointed; opex growth remains high on aggressive network investments
  • Uptick in stress assets was in-line with the trend seen in preceding quarters
  • Retain BUY and 12-month target price of Rs1,005
Click here for the detailed report on the same.
JSW Steel (Q1 FY16) – BUY
CMP Rs812, Target Rs1,081, Upside 33.1%
  • JSW’s results were higher than our estimate supported by higher contribution from subsidiaries and marginally higher than expected EBIDTA/ton for the standalone operations
  • Standalone revenue declined higher than expectations due to a sharp drop in blended realisations
  • Volume growth was strong led by an increase in share of retail sales
  • Blended realisations were quite weaker than our expectations due to a sharp fall in HRC prices and higher discounts to boost retail sales
  • Standalone EBIDTA/ton was marginally higher than estimate as the impact of higher than expected decline in realisations was offset by higher than expected decline in raw material costs and other expenses
  • JSW Coated reported strong numbers as the decline in value added product prices was lower than that of HRC
  • Maintain Buy with a revised price target of Rs. 1,081
Click here for the detailed report on the same.
Vedanta Ltd (Q1 FY16) – Accumulate
CMP Rs130, Target Rs145, Upside 11.9%
  • Vedanta’s operational performance were marginally weaker than our estimate due to a miss in its aluminium business
  • The outperformance of copper and zinc international division was offset by lower contribution from aluminum division
  • Aluminium division performance was impacted by the sharp fall in aluminum prices and product premiums and higher coal costs
  • The strong performance in copper division extended further as Tc/Rc margins continue to rise and acid realisations have improved
  • SEL’s power production improved on a qoq basis; However, output at TSPL was lower due to temporary shutdown
  • Domestic zinc business operating profit was dented by higher provisioning for DMF and increase in costs due to purchase of renewable power
  • International zinc business performance improved on the back of higher refined metal production at Skorpion and lower costs
  • Aluminium expansion would be slower than previous guidance due to the sharp fall in realisations and higher costs at BALCO
  • The company is still awaiting clearance for the expansion of its alumina refinery and conversion of IPP unit to CPP for the aluminium business
  • Merger with Cairn and HZL would be positive trigger for the company
  • Maintain accumulate rating on attractive valuations with a price target of Rs142
Click here for the detailed report on the same.

Warm Regards,
Amar Ambani

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