• R Systems' 1QFY10 results were below estimates.
• Volumes fell QoQ as a few projects were delayed and the company was not able to replenish revenues lost because of client loss in 4QCY09.
• Margins were consequently impacted.
• The tax write back led to an in-line PAT for the quarter.
• The revenue fall surprised us and likely reflects the volatility associated with a project - based business.
• The macro scene has likely improved with more discretionary spends being seen by the management.
• This is likely to support revenue growth going ahead, in our view. However, only higher consistency in revenue and profit growth will allow the stock to attract higher valuations, we opine.
• We expect tax rates to rise from CY10 due to no SEZ cover.
• We downgrade the stock to ACCUMULATE in view of the limited upside from current levels.
• The price target stands revised to Rs.113 v/s Rs.122 earlier.
• Earnings per share stand at Rs.16.7 for CY10. The high amount of (net) cash in the balance - sheet of about Rs.68 per share may act as cushion.
• A delayed recovery in major user economies and a sharper-than-expected appreciation in rupee v/s major currencies are the primary risks to our call.

Result Update: ABB Ltd

• Reflecting the still unfavourable industry scenario for T&D equipments, ABB's reported numbers are lower on the revenue as well as profit fronts. Apart from competitive pressure, EBITDA margins have been hit by significant forex losses. The company is lagging behind peers on growth in order intake as well. Margins continue to be under pressure due to a combination of capacity buildup in the industry and lackluster market growth. Competition from domestic and international players has increased over the past one year thereby forcing MNCs to accept price cuts. T&D spending at the state-utility levels have not increased meaningfully. Prefer Siemens over ABB.
• We maintain Reduce with a price target of Rs 710 (Unchanged) based on 25x CY11 earnings.

Result Update: Bharat Electronics

• BEL announced its fourth quarter numbers which are higher than provisional numbers on revenues but lower on profits.
• Order book at Rs 113.5 bn indicates moderate order booking in FY10
• Maintain Reduce with price target of Rs 1945 (Unchanged)

Result Update: Gateway Distriparks Ltd

• GDL reported good set of Q4FY10 results which are inline with our estimates
• Robust 25.0% YoY growth in the revenues of rail business
• Maintain FY11E EPS to Rs.9.4
• Due to 10% upside potential we continue to recommend ACCUMULATE on GDL with unchanged price target of Rs.135

Result Update: India Cements

• Revenues for Q4FY10 and full year FY10 grew by 9% and 10% YoY respectively, which was lower than our estimates. Revenues were impacted by lower cement realizations but were boosted to some extent by freight earnings to the tune of Rs 519 mn, wind mill earnings to the tune of Rs 131 mn and IPL earnings to the tune of Rs 1210 mn in FY10.
• Operating margins of the company stood at 13.1% and 21.9% for Q4FY10 and full year FY10 as against 25.4% and 29.1% for Q4FY09 and full year FY09. Margins have not witnessed any improvement sequentially despite improvement in cement prices.
• Net profits for Q4FY10 and full year FY10 declined by 59% and 8% respectively, primarily impacted by lower cement realizations as well as decline in the operating margins.
• At current market price of Rs 126, stock is trading at 10.5x P/E and 6.3x EV/EBITDA multiples for FY11 respectively. We continue to maintain negative stance on the cement sector and a REDUCE recommendation on the stock.

Result Update: Allahabad Bank

• Allahabad Bank (ALB) delivered 25.3% growth in NII (Net Interest Income) in Q4FY09 on back of strong growth in advances (21.9% YoY, 10.3% QoQ) and slight improvement in margin from 2.97% in Q4FY09 to 3.0% in Q4FY10.
• Its net profit declined by 15.0% in Q4FY09 due to 12.3% decline in non-interest income (lower trading profit of Rs.0.61 bn in Q4FY10 as compared to Rs.2.45 bn in Q4FY09) and higher NPA provisions (Rs.2.99 bn in Q4FY10 as against Rs.1.88 bn in Q4FY09).
• NIM improved both YoY as well as QoQ to 3.0% in Q4FY10 from 2.97% each in Q4FY09 and Q3FY10. For full year also, it improved from 2.88% in FY09 to 2.94% in FY10.
• ALB witnessed higher slippage of Rs.6.44 bn (annualized slippage ratio at 4.3%) in Q4FY10. However, gross NPA increased by only Rs.61 bn QoQ due to Rs.4.57 bn write-off during Q4FY10. In percentage terms, gross NPA improved to 1.69% at the end of Q4FY10 from 1.81% at the end of Q4FY09 and 1.77% at the end of Q3FY10.
• Its net NPA increased to Rs.4.70 bn at the end of Q4FY10 from Rs.2.28 bn at the end of Q3FY10. This led to decline in provision coverage ratio from 79.7% at the end of Q3FY10 to 61.5% at the end of Q4FY10. However, PCR (including technical W/O) stands at 79.0% at the end of FY10.
• We have slightly tweaked our earning estimate upward for FY11E and maintain ACCUMULATE on the stock with the revised target price of Rs.181 (earlier Rs.154) based on P/ABV of 1.1x its FY11E adjusted book value.

Result  Update: Andhra Bank

• The bank's net interest income (NII) grew 66.0% on back of strong loan growth (27.2%) and improvement in NIM from 2.6% in Q4FY09 to 3.44% in Q4FY10 due to sharper decline in cost of deposits (190 bps) vis-à-vis decline in yield on advances (92 bps).
• Its net profit grew 19.4% to Rs.2.40 bn in Q4FY10 from Rs.2.01 bn in Q4FY09 due to strong growth in NII (66.0% YoY) despite 60.3% increase in employee expense (due to Rs. 600 mn extra provisions done during Q4FY10) and 16.0% decline in other income.
• Total business of the bank witnessed robust growth of 29.3% to Rs.1341.9 bn in Q4FY10 from Rs.1038.2 bn in Q4FY09. The strong growth in deposits vis-à-vis loan growth has led to a decline in the C/D ratio from 74.8% at the end of FY09 to 72.7% at the end of FY10.
• NIM improved both YoY as well as QoQ to 3.44% in Q4FY10 from 2.6% in Q4FY09 and 3.35% in Q3FY10. For full year also, it improved from 3.03% in FY09 to 3.21% in FY10.
• In absolute terms, moderate increase was visible during Q4FY10 in both gross NPA as well as net NPA. However, in percentage terms, it stands at 0.86% at the end of Q4FY10, still one of the best in the industry. Its coverage ratio at ~92% is one of the highest in the industry and provides cushion against any significant risk to its earnings.
• We have slightly tweaked our earning estimate upward for FY11E and maintain BUY on the stock with the revised target price of Rs.155 (earlier Rs.130) based on P/ABV of 1.5x its FY11E adjusted book value.