Recommendations Archive

HDFC Bank 4QFY2012 performance highlights and results update

For 4QFY2012, HDFC Bank reported healthy 30.4% yoy growth in its net profit to Rs.1,453cr, in-line with ours as well as street’s estimates. Improved margins on the back of higher CASA floats and traction in retail loan book along with strong network expansion during the quarter were the key highlights of the result. We maintain our Accumulate recommendation on the stock.

Infotech Enterprises 4QFY2012 performance highlights and results update

For 4QFY2012, Infotech Enterprises (Infotech) reported a decent set of results, with volume growth of 2.1% in each of the verticals – network and content engineering (NCE) and engineering manufacturing and industrial products (ENGG). Infotech added 16 new customers during the quarter. Order intake in the NCE vertical in 4QFY2012 was the highest ever, driven in particular by APAC and North America geography. The company has announced wage hike of 8-10% for offshore employees and 2% for onsite employees and is optimistic about the demand scenario. We recommend Accumulate on the stock.

HCL Technologies 3QFY2012 performance highlights and results update

For 3QFY2012, HCL Technologies (HCL Tech) reported a modest set of numbers. The most remarkable highlight of the result was deal bookings (excluding contract renewals) of US$1.5bn plus across 14 customers in this quarter and US$2.5bn plus in the last six months across 32 customers. Management has indicated that most of the deal bookings since the last six months are coming from vendor consolidation. We recommend Accumulate on the stock.

MindTree 4QFY2012 performance highlights and results update

MindTree reported modest results for 4QFY2012, with OPM and PAT coming in ahead of ours as well as street’s expectations. The company reported a 4.9% qoq increase in volumes. MindTree has been one of the good performers on the revenue as well as margin front in the Indian IT mid-cap space, posting a 4.5% CQGR in its revenue over the past eight quarters. The company expects to post average industry growth in FY2013. We maintain our Buy rating on the stock.

CRISIL 1QCY2012 performance highlights and results update

For 1QCY2012, CRISIL’s net sales grew by 28.5% yoy to `230cr. The company reported a 317bp yoy expansion in OPM to 35.8%. Net profit increased by 23.9% yoy to `57cr. We continue to remain Neutral on the stock. Top line posts strong growth, EBITDA margin expands: For 1QCY2012, CRISIL’s top line reported 28.5% yoy growth to `230cr, led by strong growth in its rating segment, which witnessed 40.1% growth backed by strong growth in the bank loan rating segment.

Infosys 4QFY2012 performance highlights and results update

For 4QFY2012, Infosys’ results came in lower than our as well as street’s expectations on revenue as well as operating front; however, the company’s profit came in line with the expectations because of higher other income. The major disappointment came from the FY2013 USD revenue growth guidance which came in at 8-10%, much below Nasscom’s estimated growth of 11-14% which is highly negative. In addition, the company gave tepid USD revenue guidance for 1QFY2013 of 0-1% qoq. We maintain our Buy rating on the stock.

Persistent Systems Q4FY12 results update

In Dollar terms on a QoQ basis, revenues grew 4.9%; EBIDTA margins expanded 260 bps due to higher share of IP revenues, PAT up 5.5%. In Rupee terms, revenues grew by 4.9% QoQ, EBIDTA margins de-grew by 170 bps to 22.5% due to rupee appreciation, while PAT moved up by a marginal 1.6% to Rs.41 crores due to higher depreciation and fall in EBIDTA margins.

Tribhovandas Bhimji Zaveri IPO review and analysis by Nirmal Bang

Tribhovandas Bhimji Zaveri Ltd (TBZ), established in 1864, is a jewellery retailer. TBZ is a well-known and trusted jewellery retailer in India with 14 showrooms in 10 cities across five states, which have a total carpet area of approximately 48,818 sq. ft. The company is primarily into gold jewellery and diamond-studded jewellery.

Telecom Sector 4QFY12 results preview

Volume to drive Idea’s revenue growth again, Bharti growth seen subdued: We expect Bharti Airtel, Reliance Communications (RCOM) and Idea Cellular to post a combined 2.2% QoQ growth in 4QFY12 revenues at Rs291.8bn. Combined wireless revenues (only India in the case of Bharti) are expected to grow 2.8% QoQ to Rs198.2bn. However, on a company-specific basis, we expect Idea to continue to outperform on revenue growth (5.5% QoQ growth in India mobile revenues) led by strong growth in minutes of usage (MoU). We expect Bharti to report a subdued 2.2% QoQ growth in India mobile revenues as revenue per minute (RPM) and average revenue per user (ARPU) remain flattish owing to greater aggression in the market. Overall, we expect a slower 1.4% QoQ revenue growth for Bharti, as its key Africa business is likely to report growth of just 0.7% QoQ, in rupee terms, owing to slow volume uptick on account of the January strike in Nigeria, its biggest market and slight rupee appreciation of 1.4% QoQ on the quarterly average rate. We expect RCOM to report a 1.7% QoQ growth in revenues. On a YoY basis, consolidated revenues for the three telecom majors are expected to grow 2.7%, while mobile revenues are expected to rise 12.4%. However, for RCOM, it should be noted that YoY revenue is likely to fall 34.8% owing to a one-time change in its accounting policy for indefeasible rights of use (IRU) sales in 4QFY11 which inflated revenue.

Auto Sector 4QFY12 Preview

We expect two-wheeler companies in our coverage universe to report double-digit YoY growth in their 4QFY12 earnings, led by single-digit volume growth and higher average realisation. For the quarter, Hero MotoCorp and Bajaj Auto reported YoY single-digit volume growth, while TVS Motor Company reported a decline of 1%. We expect EBITDA margins of all these companies to remain muted driven by higher commodity prices and reduced operating leverage. Following the recent run-up in the share price of Bajaj Auto and HeroMotoCorp, we downgrade the rating of these companies from Hold to Sell, while the rating of TVS Motor has been upgraded from Hold to Buy after a steep correction in its share price.

HCL Technologies 3QFY12 results update

HCL Technologies’ revenue and margins in 3QFY12 were in line with expectations, while net profit was nearly 5% more than consensus estimates aided by higher other income and lower forex losses. Deal wins of US$1.5bn ensure decent revenue visibility for FY13, a key concern for the street and rightly so after the subdued outlook from Infosys. HCL Tech’s earnings report is a vote in favour of the “company-specific issues (read Infosys-specific)” camp. However, its stock price has risen 28% since we upgraded it to Buy in January and valuation at 12.5x FY13E EPS does not leave much room for upside. We maintain our Hold rating on the stock with a revised TP of Rs515 (Rs504), as we raise our target PE multiple to 13x (12.5x).

RBI 2012-13 Monetary Policy

The Reserve Bank of India (RBI) surprised the markets by announcing a 50bps cut in its repo rate to 8.0% from 8.5% in its monetary and credit policy for 2012-13, against expectations of a 25bps reduction, in the wake of consistently poor performance of the industrial segment dragging down economic growth. Beside slashing the repo rate, in order to address systematic tight liquidity situation the borrowing limit under its marginal standing facility (MSF) has also been raised from 1% to 2% of respective commercial banks’ NDTL( net demand and time liabilities). CRR (cash reserve ratio) has been kept unchanged at 4.75%.

Non-ferrous Metals Sector Coverage by Nirmal Bang

We remain cautious on global demand recovery and expect the slowdown to prolong in developed countries. We refrain from taking a call on Euroquake/sovereign debt crisis in Europe as it has become more of a political issue than plain economics. However, even if the politicians are able to save the euro currency (which entails major austerity measures for most of the Eurozone members), the case for demand contraction is quite strong in that situation too. The Chinese economy’s hard as well as soft landing would be painful for the entire metals sector barring zinc (which is relatively better placed among other metals), while monetary easing in China is unlikely to result in a pick-up in investment cycle as the investment to GDP (gross domestic product) ratio is already at an alarming level of over 65% and any further rise from here on would certainly lead to a hard landing in China. Our London Metal Exchange (LME) metal price assumptions are around 10-15% lower compared to consensus estimates, but our rupee assumption is 7-9% weaker because of extensive slowdown likely in the Indian economy, leading to 2-6% weaker metal prices in rupee terms compared to street estimates. We are positive on Hindustan Zinc (HZL) due to its attractive valuation, balance sheet strength and steady growth.

Pharmaceutical Sector 4QFY12 Preview by Nirmal Bang

We expect another strong quarter for the Indian pharmaceuticals sector led by revival in domestic market growth, launch of products having marketing exclusivity in the US and integration of recently acquired companies. Overall, we expect revenue/EBITDA/PAT to grow 16%/44%/23%, respectively. After the tepid performance in the 9MFY12 period, domestic market growth picked up in January and February 2012, at 16.5% and 18.4%, respectively, as per the recent All India Organisation of Chemists and Druggists’ (AIOCD) AWACS data. On the other hand, despite a 4% sequential appreciation in the rupee against the greenback, US revenues are likely to benefit from niche launches like Lipodox (Sun Pharmaceutical Industries), Geodon (Lupin Laboratories), and Lexapro (Cipla). Also, integration of recently acquired companies like IROM (Lupin Laboratories) and Biochem (Cadila Healthcare) will aid revenue growth. After the recent outperformance (BSE Healthcare Index’s 13% returns versus BSE Sensex, 12% during 4QFY12) and higher valuation, we believe 4QFY12 earnings assume further importance and leave little room for error. We prefer a selective approach and rate Torrent Pharmaceuticals as our top pick.

Sesa Goa / Sterlite Industries review and analysis by Nirmal Bang

We have revised our target price for Sesa Goa (SGL) and also its rating after the announcement of merger by the parent company. As per the new structure, SGL would be known as Sesa Sterlite (SSL) housing the entire operations of Vedanta Resources (VRL) barring Konkola Copper Mine (KCM). We believe the dynamics of the company have changed, with iron ore accounting for only 17% of the combined entity’s EBITDA for the trailing 12 months. The diversification into different commodities will result in lower earnings volatility. Although we are mystified by the valuation of Vedanta Aluminium (VAL), it has not come as a surprise. We have upgraded our rating on SGL from Sell to Buy post merger with a revised target price of Rs241 (earlier TP was Rs164), which is up 30% from the CMP. Accordingly, our TP on Sterlite Industries (India) stands at Rs144, up 36% from the CMP, and we assign a Buy rating to it.

Automobile Sector: Pre-budget buying boosts sales

Automobile sales surged at a brisk pace in March 2012 with passenger vehicles (PV) reporting healthy growth aided by pre-budget buying in anticipation of excise duty hike in Union Budget 2012-13. The light commercial vehicle (LCV) segment sustained its strong momentum; however, tractor and two-wheeler demand was impacted by slowdown in rural markets. Among auto majors, Tata Motors (TTMT) and Mahindra and Mahindra (MM, automotive division) reported better-than-expected volume growth; however, TVS Motor (TVSM) and Bajaj Auto (BJAUT) registered weak performance during the month. Going ahead, while we expect LCV sales to sustain their growth momentum, two-wheeler and tractor segments are expected to continue reporting moderate volumes. We also expect revival in PV sales to continue with the likely easing of interest rates going ahead

United Spirits review and analysis by Angel Broking

United Spirits (USL) is promoted by United Breweries Holding (UBH, 28%), which is also the promoter of Kingfisher Airlines (KFA). According to UBH’s FY2011 Annual Report, the company has given guarantees worth Rs.9,135cr on behalf of Kingfisher Airlines (KFA). If KFA goes bankrupt, UBH will have to repay KFA’s debt and other liabilities (which are guaranteed by UBH), which can only happen if UBH offloads its stake in United Breweries Ltd. (UBL), USL or sell its other fixed assets or subsidiaries. If UBH plans to offload its stake in USL, we believe it would lead to better price discovery for USL, as it is presently trading at its historically low valuations and the stake sale would be at a premium. In the past also, companies have been known to pay huge premium to buy majority stakes in such companies, thereby leading to a significant increase in stock prices in a short period of time.

Infosys 4QFY12 results update by Nirmal Bang

Infosys’ 4QFY12 dollar revenues and 1QFY13 as well as FY13 guidance, all of which were below expectations, suggest the environment has worsened as clients ramped down engagements on rising macro-economic uncertainty. Consequently, the stock took a 12.6% battering on the bourses. In our view, the key question is whether Infosys’ poor guidance for FY13 is company-specific or an industry-wide trend. At this point, the jury is still out on this issue, which will be addressed over the next few days as other information technology (IT) firms announce their results. As regards Infosys, we slash our FY13 revenue, EBITDA and EPS estimates by 7.7%, 12.6% and 11.6%, respectively, owing to reduction in volume growth estimates. We also downgrade the PE multiple we assign to the stock to 15x (17x earlier) and thereby downgrade our target price to Rs2,438 (Rs3,125 earlier) even as we retain our Hold rating on the stock.

Realty Sector 4QFY12 Preview

We expect 4QFY12 results of companies under our coverage universe to improve sequentially on account of uptick in execution and projects crossing the threshold limit. New launches during the quarter were a mixed bag with Bangalore and Chennai continuing to witness strong absorption. Barring Sobha Developers and Prestige Estate Projects, all other companies have missed their FY12 project launch guidance, thereby resulting in a decline in FY12 pre-sales. Lack of asset sales and subdued pre-sales led most of the companies to miss their debt reduction targets. We expect companies under our coverage to post revenue growth of 18.5%, EBITDA growth of 26.3% and profit growth of 10.0% sequentially.

Indraprastha Gas review and analysis by Nirmal Bang

A precipitous fall of 33% in the Indraprastha Gas (IGL) stock after the Petroleum and Natural Gas Regulatory Board’s (PNGRB) downward revision in tariff is regarded as exaggerated reaction by some sections of the market, citing several loopholes in the regulator’s order. We expect the overhang on IGL to continue until the final verdict from the Appellate Tribunal as well as the Delhi High Court. We retain our Sell rating on IGL with a downward revision in the target price by 43% to Rs206 from Rs363. Key upside risk to our TP would be leeway available to IGL for hiking the marketing margin and/or favourable ruling from the court.

Oil & Gas 4QFY12 Sector Preview

Mounting under-recoveries following higher crude oil prices along with the government’s inability to hike the prices of subsidised fuels continue to mar the earnings of index heavyweights Oil & Natural Gas Corporation (ONGC) and GAIL (India). In the mid-cap space, Petronet LNG is likely to post robust YoY earnings aided by higher capacity utilisation at its Dahej terminal. City gas distribution (CGD) companies Indraprastha Gas (IGL) and Gujarat Gas Company (GGCL) are likely to post better margins compared to the December 2011 quarter on the back of price hikes which offset the effect of higher costs of re-gasified liquefied natural gas (RLNG).

Capital Goods 4QFY12 Sector Preview

We expect the engineering and capital goods sector to report subdued performance for the seasonally strong March 2012 quarter. New order inflows, key growth driver for the industry, have remained lukewarm for the BTG sector. Except the boiler portion of NTPC Bulk Tender 1 (11x660 MW), no major BTG/EPC contract came up for bidding during the quarter. Industrial orders also remained weak as corporate capex recovery has not yet commenced owing to higher borrowing costs in the economy in the wake of a tight monetary policy. Even though power T&D orders have seen an uptick from Power Grid Corporation of India (PGCIL), intense competition because of the entry of new domestic vendors has shrunk the market share of existing players along with rising pricing pressure. Likely project deferral because of unfavourable macro-economic environment is likely to lead to slippage in project execution. Higher interest rates as well as input costs are likely to keep margins suppressed for the quarter. Overall, we expect the March quarter to be one of the weakest in the past few years because of moderation in revenue growth, declining order book and sustained pressure on margins.

Arvind review and analysis by Angel Broking

With a strong portfolio of 21 brands and aggressive 23.9% CAGR in retail expansion at 1.58mn sq ft, we expect Arvind’s brands and retail business to show 25.6% CAGR over FY11-14E at Rs19.1bn and increase its share from 22% to 32.7% over the same period. Positive result of major capex of Rs4.3bn over FY11-12 would be visible in FY13-14. Its stock is currently trading at 6.5x/4.9x FY13/14E P/E and 5.2/4.2x EV/EBITDA, below the mean of 8.1x and 6.5x, respectively. Strong 12.4% revenue CAGR aided by 104bps higher operating margin, working capital efficiency and debt reduction by 26.5% should drive profitability CAGR by 45.6% over FY11-14E, generate free cash flow of Rs5.2bn over FY13-14E, improve adjusted RoCE by 303bps over FY11-14E and calls for expansion of PE multiple. We assign a Buy rating to Arvind with a SOTP-based TP of Rs117, valuing it at 9.1x/6.4x/1.2x PE, EV/EBITDA, P/B for FY13E.

Prestige Estates Projects review and analysis by Nirmal Bang

We recommend Prestige Estates Projects (PEPL) because of its strong presence across segments in Bangalore (71% of its land bank) where the absorption level continues to remain healthy unlike in other markets in India. PEPL’s operating cash flow is set to improve over the next two years with improvement in realisation from debtors and higher rental income. We believe an outstanding sum of Rs4.3bn related to Shantiketan (Bangalore) project likely to be received by PEPL over the next three quarters (Rs1bn received in 3QFY12) as the office leasing environment remains conducive in Bangalore. We expect PEPL’s yearly rental run rate to show a CAGR of 23% over FY12-14E at Rs2.8bn wherein 25% of incremental supply is pre-committed. Also, most of its projects like White Meadows/Kingfisher Tower/Polygon would cross the threshold limit in coming quarters, thereby driving up revenues. We assign a Buy rating to PEPL with a target price of Rs143.

Jyothy Laboratories review and analysis by Angel Broking

Jyothy Laboratories Ltd. (JLL), a company having three brands, is set to transform into a multi-brand company with the acquisition of an 83.7% stake in Henkel India (Henkel), which owns seven brands. As a result of this synergy, we expect JLL’s consolidated revenue to post a CAGR of 35% to Rs.1,627cr and profit to post a CAGR of 36% to Rs.166cr over FY2011-14E. We initiate coverage on JLL with a Buy recommendation and a target price of Rs.248, based on SOTP valuation.

Tech Mahindra and Mahindra Satyam report: Merger announced

The Board of Directors of Tech Mahindra (Tech M) and Mahindra Satyam (Satyam) have approved the merger of both the companies along with their wholly owned subsidiaries, Venturbay Consultants Pvt. Ltd., C&S System Technologies Pvt. Ltd., CanvasM Technologies Ltd. and Mahindra Logisoft Business Solutions Ltd. The swap ratio approved by the board of both the companies is 2:17, i.e., 2 shares of Tech M (face value of Rs.10 each) for every 17 shares of Satyam (face value of Rs.2 each). The merger process could take up to nine months to complete and will be effective from April 1, 2011.

IT Budget Delays to Slow Sequential Growth; All Eyes on FY13

We expect the top four information technology (IT) companies in our coverage universe to post 1-3% QoQ volume growth in 4QFY12. Subdued volume growth is likely mainly due to delay in finalisation of CY12 IT budgets. On the pricing front, we expect a downward trend and factor in around 0.2-1.1% QoQ dip in blended pricing owing to an as-yet challenging business environment and intense competition, leaving little scope for a hike in billing rates. From a currency standpoint, we do not expect any significant impact as the quarterly average movement of all major currencies versus the US dollar was range-bound in 4QFY12.

MT Educare IPO review and analysis by Nirmal Bang

MT Educare is a diversified player in the education system providing coaching classes to secondary & higher secondary, commerce and competitive exams. It operates through 188 centres in Maharashtra, Karnataka, Gujarat and Tamil Nadu. Over the last 24 years of operations, MT Educare has created a dominant position for itself especially in Mumbai.

National Buildings Construction IPO review and analysis by Keynote Capitals

National Buildings Construction Corporation Ltd. (NBCCL) was incorporated in November, 1960 as a wholly owned GoI undertaking under the erstwhile Ministry of Works, Housing & Supply (MoWHS), which is now known as the Ministry of Urban Development (MoUD). NBCCL is engaged in project management consultancy, civil infrastructure for power sector and real estate development.

National Buildings Construction IPO review and analysis by Keynote Capitals

National Buildings Construction Corporation Ltd. (NBCCL) was incorporated in November, 1960 as a wholly owned GoI undertaking under the erstwhile Ministry of Works, Housing & Supply (MoWHS), which is now known as the Ministry of Urban Development (MoUD). NBCCL is engaged in project management consultancy, civil infrastructure for power sector and real estate development.

Union Budget 2012-13 - Preview

The central government is evidently suffering from regional shackles (exacerbated in the recent state l ti elections) and, hence, major reforms such as GST, FDI in retail and land acquisition may take an extended period of time to get implemented. In the meanwhile, in the current budget, in our view markets will be happy even if the government at least delivers on one front – a credible commitment towards fiscal discipline. For any fiscal discipline promises to be viewed as credible, in our view, the government would need to implement some concrete measures such as indirect tax increases, while refraining from any increase in populist programs at least in this budget (as against the next budget, which will be the last before general elections).

Orchid Chemicals 3QFY2012 performance highlights and results update

Orchid Chemicals (Orchid) reported below the line numbers for 3QFY2012. Going forward, for FY2012, management has guided revenue to Rs.2000cr and EBITDA margin at ~24%.The company has received a sanctions of around $100mn, primarily to repay FCCBs of $163mn which was due in February 2012.We maintain our Buy view with a revised price target of Rs.255.

Indoco Remedies 3QFY2012 performance highlights and results update

For 3QFY2012, Indoco Remedies (Indoco) declared in-line results at the revenue front, reporting growth of 23.8% yoy. However, on the net profit front, growth came in lower than expected, declining by 6.3% yoy. This was mainly on account of OPM declining by 174bp yoy to 10.8% (12.5%), lower than our estimates. The domestic formulation segment grew by 14.8% yoy during the quarter, contributing 60.0% to the total revenue, whereas formulations exports increased by 35.5% yoy. We recommend Buy on the stock.

Aurobindo Pharma 3QFY2012 performance highlights and results update

For 3QFY2012, Aurobindo Pharmaceuticals (APL) posted above expectations, in the area of operating profits. The company’s top line was just in line with our estimates. The highlight of the quarter was, better than expected OPM’s. The OPM came in at 13.3% V/s expectations of 12.1%. However, including the forex losses and redemptions the company reported losses. We maintain our Buy view on the stock.

Cera Sanitaryware review and analysis by Angel Broking

Cera Sanitaryware Ltd. (CSL) is the third largest sanitary ware company in the organized sector with about 22% market share in India. The company is engaged into manufacturing sanitary ware and faucet ware (commenced since September 2010) products. The company also markets wellness products, which are majorly outsourced. Owing to the changing lifestyle of people, increasing awareness for improving sanitation coverage, expenditure on sanitary ware has been consistently increasing as a percentage of total construction expenditure, thereby providing significant traction for the sanitary ware sector. CSL is trading at an attractive PE of 7.6x and EV/Sales of 0.9x on FY2013E. We recommend Buy on CSL with a target price of Rs.289, based on target PE of 10x and implied EV/Sales of 1.1x for FY2013E.

IDBI Bank: Management Meet Update

Savings account strategy not ideal: IDBI bank had waived off all Savings account (SA) related fees in 2QFY2011 to attain higher growth in SA deposits. While this strategy led to substantial traction in saving accounts for the bank in 2QFY2012, we believe, post the savings rate deregulation, it is likely to attract all the “wrong” kind of customers. The strategy is more oriented towards drawing retail customers with low savings balances and higher servicing cost. On the other hand, interestsensitive urban-centric customers with higher savings balances are likely post the de-regulation to move to new private banks offering higher savings rates.

Buy SpiceJet and Sell Kingfisher Airlines

Kingfisher Airlines, which was one of the largest airlines in India, has drastically reduced its fleet size from 60 aircraft to ~20 aircraft due to financial stress. The company’s account has also been frozen due to the ongoing issue with the tax authorities. Further, we believe it would be difficult for the company to maintain its current fleet size, unless cash is infused in the company. Kingfisher Airlines, which needs cash urgently, has been aggressively pricing its tickets, which has resulted in stiff competition in the industry, leading to losses for all airlines. Going ahead, we believe the company might cease to operate in the short term, and this decline in capacity and aggressive ticket pricing will disappear – proving to be a positive development for SpiceJet. Currently, SpiceJet is one of the few airlines that have expanding capacity and can take full advantage of the mismatch between lack of supply, strong demand growth as well as increased ticket prices, leading to better profitability in the future.

GlaxoSmithKline Pharma 4QCY2011 performance highlights and results update

GlaxoSmithKline Pharma (Glaxo) reported its 4QCY2011 results, higher than estimates, on the bottom-line, mainly driven by the tax expenses, while the net sales came in at just in line with estimates. The company’s OPM for the quarter came in just at 30.1%, just in line with our estimate. We continue to maintain our Neutral view on the stock.

Aventis Pharma 4QCY2011 performance highlights and results update

For 4QCY2011, Aventis Pharma (Aventis) reported in-line results at the top-line and net profit fronts, led by growth across the domestic market. Domestic sales grew by 24.5% yoy, contributing around 83% to the company’s total revenue. The company incurred planned expenditure in two of its critical projects – Prayas, a project to deliver high-quality, low-cost healthcare to the rural population; and entry into the over-the-counter (OTC) market. These projects are slated to be the future growth drivers for the company. Given the valuations, we recommend a neutral on the stock.

Cipla 3QFY2012 performance highlights and results update

For 3QFY2012, Cipla’s numbers came just in line with our expectations on the top-line and bottom-line fronts. The net sales and profits for the quarter was Rs.1711cr and Rs.270cr, registering a growth of 14% yoy and 16% yoy respectively. On the profitability front, the gross margins and operating profits came in lower than the expectations. We recommend an Accumulate on the stock.

Dishman Pharmaceuticals 3QFY2012 performance highlights and results update

For 3QFY2012, Dishman Pharmaceuticals (Dishman) reported a lower-thanexpected net profit performance. The sales and net profit came in at Rs.266cr and Rs.17cr, which was lower than the expected net sales and profits of Rs.305cr and Rs.20cr respectively. On the positive side, the company posted good expansion in the operating margins. We maintain our Buy rating on the stock.

MphasiS 1QFY2012 performance highlights and results update

For 1QFY2012, MphasiS’ results came in below our as well as street expectations on all fronts. The company’s USD revenue declined on a qoq basis due to ramp down in projects from HP channel and annual shutdown in developed economies because of the holiday season. At the CMP, the stock is trading at 10x FY2013E EPS of Rs.39.2 with a strong cash position of Rs.2,182cr, which warrants limited downside. We maintain our Accumulate rating on the stock.

Automobile Sector: Healthy growth despite macro concerns

Auto sales numbers for February 2012 surprised positively. Passenger vehicles (PV) registered a healthy volume performance, which we believe could be due to consumers advancing their purchases in anticipation of excise duty hike and additional tax on diesel cars during the Union Budget. The light commercial vehicle (LCV) segment sustained its strong volume traction, while the tractor segment reported a significant decline in its volumes, reflecting the slowdown in demand. Among auto majors, Tata Motors and Maruti Suzuki reported betterthan- expected performance; however, TVS Motor registered disappointing volumes during the month. Going ahead, while we expect LCV sales to sustain their growth momentum, two-wheeler and tractor segments are likely to witness moderation in demand. We also expect revival in PV sales to continue, with the likely easing of interest rates going ahead.

Sesa Sterlite: Promoter gains, Minorities to lose

Vedanta Resources, the promoter of Sesa Goa and Sterlite Industries, has approved to merge the two companies in order to simplify the group’s holding structure and to lower its debt. The merger will create a new entity Sesa Sterlite, wherein existing shareholders of Sterlite Industries will receive three shares of Sesa Goa for every five existing shares of Sterlite Industries. The merged entity will takeover the remaining 70.5% (Sterlite Industries holds 29.5%) stake of Vedanta Aluminium (VAL) from Vedanta Resources by issuing 72.3mn (2.4% of the merged entity) existing shares of Sesa Goa, valuing VAL’s equity at Rs.2,332cr and the enterprise’s value at Rs.30,000cr.

Infotech Enterprises Analyst Meet Update

We recently attended the analyst meet of Infotech Enterprises (Infotech) held at Hyderabad. The meet focused on giving investors an idea about the company’s systems and processes through presentation by various business heads, sub-vertical heads and demo of a range of company’s projects. The major take away from the meet was that the company is on the right track in terms of making investments to strengthen its product portfolio and is taking initiatives to improve its financial metrics. Infotech’s performance over the past six quarters has been mixed, with operational margins being the major disappointment, which the company is now focusing to improve. We maintain our Accumulate recommendation on the stock.

CRISIL 4QCY2011 performance highlights and results update

CRISIL registered strong top-line growth in 4QCY2011. The company’s net sales grew by 26.6% yoy and 2.1% qoq to Rs.225cr. The company reported a 350bp yoy contraction in its OPM to 35.6%, mainly due to higher employee cost during the quarter. Net profit increased by 10.4% yoy to Rs.56cr. We continue to maintain our Neutral recommendation on the stock.

ABB India 4QCY2011 performance highlights and results update

ABB India’s (ABB) reported mixed set of numbers for 4CY2011. The company reported lower-than expected top-line growth; however margin expansion and low base effect of the corresponding quarter resulted into strong earnings growth. Order intake during the quarter surged by 58.5% yoy Rs.2,209cr mainly constituted by large orders (~Rs.1,560cr), leading to a robust order book of Rs.9,129cr. We expect strong order accretion in the coming quarters, which will lend improved growth trajectory. In addition, margin recovery in the long term seems likely, given the pricing in the T&D segment has bottomed out. However, overly expensive valuations don’t warrant a change in our view; we maintain Sell on the stock.

MRF 1QSY2012 performance highlights and results update

MRF reported revenue growth of 32.7% yoy to Rs.2,875cr during 1QSY2012. The company’s EBITDA margin contracted by 226bp yoy to 9.0% from 11.2% in 1QSY2011 on account of increased raw-material cost on the back of higher rubber prices. The company reported net profit growth of 9.7% yoy to Rs.113cr in 1QSY2012 as compared to Rs.103cr in 1QSY2011.

Multi Commodity Exchange of India Ltd. review and analysis by Angel Broking

Multi Commodity Exchange of India Ltd. (MCX) is a leading commodities exchange, which received permanent recognition from Government of India on September 26, 2003. The company reported a market share of 87.3% as of December 2011. MCX is also the fifth largest commodity futures exchange globally in terms of the number of contracts. As of June 2011, MCX was the largest silver exchange, the second largest gold, copper and natural gas exchange and the third largest crude oil exchange for this period globally.

Electrosteel Castings report: Iron ore mines get MOEF clearance

We resume coverage on ECL in view of a positive development (receipt of forest clearance). ECL has received forest stage-I clearance for its iron ore mines located at Kodolibad, West Singhbhum, Jharkhand, from Ministry of Forests and Environment (MOEF).ECL expects to receive stage-II clearance in the coming 2-3 months and then sign mining lease with the state government. After signing the mining lease, ECL can develop the mine and resume production.

Monnet Ispat 3QFY2012 performance highlights and results update

Monnet Ispat’s (MIL) net sales grew strongly by 38.6% yoy to Rs.481cr during 3QFY2012. Growth was mainly driven by the 17.8% yoy increase in sponge iron realization to Rs.21,004/tonne. The company’s sponge iron sales volumes grew by 8.3% yoy to 160,521 tonnes, while power sales volumes declined by 18.1% yoy to 172mn units. Net realization on power sales grew by 2.3% yoy and 18.5% qoq to Rs.3.5/unit during the quarter.

Multi Commodity Exchange of India Ltd. IPO review and analysis by Nirmal Bang

MCX is the leading commodities exchange in India based on value of commodity futures contracts traded. It is a de-mutualised exchange and received permanent recognition from the Government of India on September 26, 2003, to facilitate nationwide online trading, clearing and settlement operations of commodities futures transactions. As of December 31, 2011, MCX offered trading in 49 commodity futures based on contract specifications, from a diverse range of classes including bullion, ferrous and non-ferrous metals, energy and agriculture.

Multi Commodity Exchange of India Ltd IPO review and analysis by Keynote Capitals

Multi Commodity Exchange of India Ltd. (MCX) is a de-mutualised multi commodity association and was incorporated in April 2002. MCX is the leading commodities exchange in India based on value of commodity futures contracts traded. Its a de-mutualised exchange and received permanent recognition from the Government of India in September 2003 to facilitate nationwide online trading, clearing and settlement operations of commodities futures transactions. Online futures trading commenced on MCX in November 2003.

NMDC report: NMDC cuts prices; lowers volume guidance

NMDC has cut prices of iron ore fines and lumps by 20% and 3%, respectively for 4QFY2012 on the back of decline in global iron prices (-18% over the past five months), the recent rupee appreciation (7.5% since January 1, 2012) and increase in export duty on iron ore (from 20% to 30% effective January 1, 2012). The price cut by NMDC is higher than our expectations given the shortage of iron ore in the domestic markets (especially iron ore lumps) on the back of mining ban in Karnataka region and government’s stricter stance on illegal mining in other regions such as Goa and Orissa.

Dhanuka Agritech Q3 FY12 results update by Nirmal Bang

Dhanuka Agritech reported results lower than expectations due to bad North East Monsoon which impacted the whole agrochemicals¡¦ industry. The reported sales of Rs 109.8 cr has declined by 42.6% qoq and 2.9% yoy. EBITDA margins declined to 10.9% (down 239 bps qoq and 467 bps yoy) due to higher raw material cost and administration cost. Management expects Q4 to be better than Q3, however real push in numbers would only be visible in Q2FY13 i.e. in the Kharif season.

Astral Poly Technik Ltd. Q3 FY12 results update by Nirmal Bang

Revenues grew 63% YoY at Rs.160.5 crores. This was on the back of continues demand for its products and a promotional scheme offered by the company during the quarter. The company has utilized its capacity to the tune of 9727 M.T. as against previous Q2FY12 quarter of 9822 M.T. EBIDTA margins declined by 184 bps at 10.2% on the back of increase in expenses for the promotional scheme which was to the tune of Rs.4.5 crores. In addition material costs went up by 140 bps QoQ on the back of rupee depreciation.

State Bank of India 3QFY2012 performance highlights and results update

For 3QFY2012, SBI’s standalone net profit increased by 15.4% yoy to Rs.3,263cr, which were above street estimates. Sequential expansion in both domestic (32bp) and foreign NIM (4bp) was the major positive from the result. However, the asset quality continued to disappoint with gross and net NPA levels increasing sequentially by 18.1% and 16.6%, respectively. We recommend an Accumulate on the stock with a target price of Rs.2,595.

Jaiprakash Associates 3QFY2012 performance highlights and results update

For 3QFY2012, Jaiprakash Associates (JAL) reported in-line performance on the revenue front but better-than-expected numbers on the EBITDAM and PAT level. This outperformance was owing to high margin in construction segment (owing to last leg of payment for completion of Yamuna expressway) and higher other income (on account of dividend from subsidiaries). We recommend Buy on the stock.

CESC 3QFY2012 performance highlights and results update

For 3QFY2012, CESC posted a 32.7% yoy decline in its net profit on account of customers being billed under the existing tariff, as WBERC’s new tariff approval for FY2012 is still pending (generally awarded in the second quarter). Although the current tariff provisions allow the hike in fuel costs to be passed on automatically, CESC has to obtain WBERC’s orders for passing on the additional fixed costs. The company expects to receive the new tariff order in 4QFY2012, post which it can charge higher tariff in 4QFY2012 with retrospective effect.

IVRCL 3QFY2012 performance highlights and results update

IVRCL reported a disappointing set of numbers for 3QFY2012, with lower-thanexpected performance on all fronts. However, order inflow for 9MFY2012 was commendable at Rs.10,700cr, given the current scenario. The company’s order book stands at Rs.25,000cr (4.4x FY2011 revenue, including L1 projects of Rs.3,000cr). During the quarter, IVRCL Assets and Holdings has sold its Noida land (3 parcels out of 4) and is expecting to receive the cash to the tune of Rs.225-300cr by March 2012.