Stock Views on GODREJ CONSUMER PRODUCTS, GSK CONSUMERS, ICICI BANK

BANK OF AMERICA ML on ICICI BANK

The earnings of 1,450 crore (up over 44% year-on-year) in the March 2011 quarter were in line with estimates. They were driven by a better-than-expected rebound in topline (up 23%). Margins expanded by 10 basis points (bps) year-on-year and sequentially to 2.7% due to re-pricing of domestic loans. Loan growth was strong at 19.4% from the year-ago figure (5% sequentially) led by corporate and overseas businesses. Provisions were 16% lower than estimated, as asset quality was sustained with no accretion of new non-performing assets. Current account and savings account (CASA) deposits rose to 45.1% from 44.2% in the previous quarter and 41.7% a year ago. The bank successfully leveraged its expanding distribution. Core fees were up 18% year-on-year, largely driven by corporate and international fees. We estimate earnings growth of 35% and 25% in FY12 and FY13 respectively, driven by 19-20% topline growth led by 20 bps margin expansion between FY11 and FY13, as loans would re-price and margins in overseas business would increase.

NOMURA on GSK CONSUMERS

GSK Consumers reported PAT of 111 crore for the March quarter of FY11, slightly below Nomura's expectation due to lower sales. During the quarter, the company reported net sales of 727 crore, 8.5% lower than Nomura's estimate. Nomura maintains a Buy rating on GSK Consumers Healthcare. According to Nomura, though loss of momentum in volumes is a concern, the good news is that the profitability has been stable. Gross margin improved by 143 bps year-on-year to 62.9%. Topline momentum has started to pick up as per the management and should return to a mediumterm sustainable rate over the rest of 2011. The company is guiding for an 8-9% input cost inflation for 2011, which is significantly ahead of what they saw in March quarter 2011. Going forward, the company expects to maintain gross margins at best and not improve it from 2010 levels. Nomura believes in the long-term story of GSK Consumers.

JP MORGAN on GODREJ CONSUMER PRODUCTS

JP Morgan maintains a 'Neutral' rating on Godrej Consumer Products. For the March quarter of FY11, GCPL reported net sales, EBITDA and PAT growth of 96%, 65% and 54% respectively. Given a host of acquisitions done over last year, consolidated results for the company are not comparable on a y-o-y basis. While sales growth was marginally better than estimates, EBITDA margins (- 330 bps y-o-y) came in lower than expectations. Higher other income (+195% y-o-y, includes 10 crore of interest accrued on ESOPs) led to earnings coming in 5% ahead of estimates. Domestic sales increased 17% year-on-year driven by 13%, 18% and 17% sales growth for soaps, hair colour and household insecticides respectively. Volume growth stood at 9%, 11% and 17%, respectively. Nomura has given a price target of 430 based on a oneyear forward earnings multiple of 21x, which is at a 10% premium to the historical five-year average.