Buy Shree Renuka Sugars Ltd.

Price Rs223.75
Target Price Rs274

Higher trading, lower sugar prices impacted margins

Revenue above expectation: Net sales of Shree Renuka Sugar (SHRS) for Q1FY10 was Rs 14.3bn against Rs 4bn in Q1FY09 (we expected Rs 8.78bn). Amount of sugar sold in Q1FY10 was 0.29m tonnes at average realisation of Rs28.8/Kg against 0.132m tonne at an average realisation of Rs16.36/Kg in Q1FY09 (we expected 0.22m tonne at average realisation of Rs30.5/Kg). Amount of Alcohol sale for Q1FY10 was 13.7m litres at average realisation of Rs29.5/litre against 16.84m litres at average realisation of Rs24.5/litre in Q1FY09 (we expected 25m litres at average realisation of Rs27/litre). The company sold 80m units of power at average realisation of Rs5.0/unit against 72m units at average realisation of Rs7.4/unit in Q1FY09 (we expected 95m units at average realisation of Rs 6/unit).

Buy Shriram Transport Finance Company Ltd.

Price Rs501.00
Target Price Rs635

Results surpass expectations

Operating performance improves: Shriram Transport Finance Corporation (STFC) reported PAT of Rs2.37bn, higher than our estimate of Rs2.04bn. Higher-than-expected topline growth, containment of operating costs and provisions trickled down into higher bottomline. AUMs increased by 23.6% YoY and 9.1% QoQ as the disbursal growth maintained healthy momentum (71.4% YoY and 10.3% QoQ). During the quarter, STFC acquired Rs11.05bn CV loan portfolio from GE Capital, excluding which the AUM growth stood at 18.7% YoY.

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