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IFIN
Ahuluwalia Contracts (Sell)
CMP: Rs 53
Target: Rs 43
The Employees Provident Fund Organisation (EPFO) has raised a notice of Rs 55 crore on ACIL, for not paying PF contribution to workers employed for the Common Wealth Games Projects between September 2007 and March 2009. The amount has been claimed after forensic analyses performed by National Crime Records Bureau (NCRB) states that the records of the establishment are forged and thumb impressions of workers and records submitted by ACIL do not match. In addition to the PF dues, the department has claimed damages and penal interest for five years form the company, tantamount to a Rs70 crore (app) from ACIL. ACIL is required to pay the liabilities within 15 days annual interest at 12 per cent per annum and annual damages of 25 per cent. This raises a new concern for ACIL, which is struggling in the midst of slow order inflow and execution of projects. We believe this would impact the EBIDTA by 166 per cent for FY13E and reduce to Rs 27.9 crore. Our revised estimate for PAT is Rs 62.39 crore after factoring in the dues payment. TheBook value of the company would be reduced to Rs 36 a share.
Karvy Stock Broking
Bajaj Auto (Buy)
CMP: Rs 1,549
Target: Rs 1,800
Bajaj Auto’s financials came in more or less in line with our expectations in first quarter of FY13. Its revenues rose 3.4 per cent year-on-year to Rs 4,860 crore despite 1.3 per cent y-o-y decline in volume (to 1.07 mn units), mainly due to price hike in domestic market coupled with higher export realization, backed by favourable currency. It can be noted that the company hedged exports at higher rate of around Rs 50/$ in Q1FY13 against Rs 47.5/$ in Q1-FY12. The company reported nearly flat EBIDTA margins on y-o-y basis, but it declined by 188 bps sequentially to 17.9 per cent, due to lower exports and declining three-wheeler sales. Going forward, we expect improvement in exports volumes and margins estimates upwards of 18 per cent from current level of below 18 per cent. Currently, we maintain our FY14E estimates of EPS Rs 128.5 on revenues of Rs 2,450 crore.
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