Sushil Finance

Bank of Baroda (Buy)

CMP: Rs 736

Target: Rs 1,078

Bank of Baroda (BoB) has posted decent numbers during Q2FY12, which were in line with our expectations. Its net profit grew by 14 per cent YoY to Rs 11.7 billion, largely driven by strong NII and lower operating expenses. Bank of Baroda is one of the best managed PSB with a consistently strong business growth and superior asset quality. Considering its decent H1FY12 performance, we have largely retained our FY12 & FY13 estimates. Going forward, we expect its Advance and Deposit to grow by 18.5 and 17.8 per cent in FY12E and 18 and 17.5 per cent in FY13E, while Net Profit to grow at 2 per cent in FY12E and at 16 per cent in FY13E. We believe the stock can trade at 1.5x P/ABV given its sustainable 20 per cent ROE. We maintain BUY with a price target of Rs.1078.

Nirmal Bang

ONGC (Buy)

CMP: Rs 283

Target: Rs 338

ONGC reported net profit of Rs 86.42 billion for Q2FY12 compared to Bloomberg consensus estimate of Rs 65.63 billion and our estimate of Rs 54.23 billion on the back of all-time high realisation from nomination fields. We believe Q2FY12 net realisation of $83.70/bbl should be treated as one of the freebies allowed by government, possibly ahead of the run-up to the follow-on public offer, and in next two quarters the realisation should be at the normal level of $55-60/bbl to average realisation of $60/bbl in FY12, given that under-recoveries for the year are likely to be Rs 1,200 billion if fuel prices remain unchanged. We maintain our Buy rating on ONGC with a target price of Rs 338 but there is an upside risk to our TP if government sticks to 33 per cent subsidy sharing formula for FY12 as it did in first two quarters of the year.

Standard Chartered

Marico (In Line)

CMP: Rs 149

Target: Rs 159

Q2 FY12 results came in below expectations. Consolidated net sales, EBITDA and PAT growth were respectively at 25.6, 17.7 and 9.4 per cent. Domestic volume growth was robust at 14 per cent, with Kaya posting same-clinic growth of 16 per cent and organic international sales growth being moderate at 14 per cent. Substantially higher input cost-to-sales ratio resulted in lower EBITDA growth of 18 per cent yoy, while higher taxes lowered net profit growth to single digit. We find current valuations unsustainable. We revise price target to Rs 159 (from Rs152). Reiterate In-Line.

Nestle India (In Line)

CMP: Rs 4,497

Target: Rs 4,520

Results marginally ahead of expectations – Net sales, EBITDA and Adj PAT grew 20, 28 and & 22 per cent, respectively. Despite an inflationary scenario input cost-to-sales declined 91bps yoy and 130bps qoq to 48.2 per cent. Higher tax rate (due to expiry of tax holiday in Pantnagar unit), higher depreciation (due to increased capex) and lower other income led to Adjusted PAT growth being lower than EBITDA growth. Our estimates remain largely unchanged but we revise our price target to Rs 4,520 (earlier Rs4,280) as we roll forward to September 13. Maintain IL as current valuations, at one-year-forward P/E of 37x, offers no upside.

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