Indian markets are expected to open in green tracking their global peers.
After closing negative for 2-days on concerns over Fed acknowledging slower economic growth during winter months, U.S. stocks on Friday rose sharply. Surge in U.S. markets was on account of surprise in strong U.S. jobs report, which was released on Friday. Apple led the rally amongst tech stocks.
FTSE 100 closed at 6,986, up 6.4% since beginning of year, surpassing its dotcom era peak. Boosted by ECBs €1.1 tn quantitative easing programme and speculation that BoE would delay raising interest rates pushed the FTSE to new highs.
Miss on Q4 results across few stocks, coupled with weak monsoon prediction by Met department had put pressure on the Indian markets. Indian stocks continued their negative trend on Thursday led by Cement, Auto and Metal stocks.
Markets Today
The trend deciding level for the day is 27,050 / 8,185 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 27,203 - 27,395/ 8,226 - 8,270 levels. However, if NIFTY trades below 27,050 / 8,185 levels for the first half-an-hour of trade then it may correct towards 26,859 - 26,706 / 8,141 - 8,101 levels.
Auto sales volumes April 2015 update
- Maruti Suzuki volumes grew 30% yoy to 111,748 units and were ahead of our estimates (we estimated 7% yoy growth). Domestic volumes grew 27% to 100,709 units while the export volumes grew 56% yoy to 11,039 units.
- TVS Motors volumes grew 14% yoy to 195,937 units and were marginally above our estimates (we estimated 10% yoy growth). Domestic sales grew 13% yoy to 163,511 units while the export volumes grew 18% yoy to 32,426 units
- Eicher Motors commercial vehicle business (VECV) volumes grew 12% yoy to 3,930 units and were marginally ahead of our estimates (we expected 7% growth). Two wheeler business (Royal Enfield) volumes grew healthy 42% yoy to 33,918 units and were in line with estimates.
- Hero Motocorp volumes declined 7% yoy to 533,305 units and were below our estimates (we estimated flat volumes on yoy basis).
- Tata Motors volumes grew 7% yoy to 36,205 units and were in line with our estimates. PV sales grew 38% yoy to 10,230 units while the CV sales declined marginally 5% yoy to 22,189 units.
- M&M overall volumes declined 4% yoy to 54,738 units and were in line with our estimates. Automotive sales remained flat at 36,727 units while the tractor sales dipped 1 3% yoy to 18,011 units.
Result Review
Elecon Engineering - 4QFY2015 (CMP: Rs.68/ TP: Rs.87/ Upside: 28.2%)
For 4QFY2015, Elecon reported good set of numbers. The standalone top-line for the quarter witnessed 7.9% yoy increase to Rs.176cr, which is higher than our estimate of Rs.151cr. Raw material cost as a percentage of sales declined by 459bp yoy to 54.5% of sales. Employee expense and other expenses remained stable during the quarter increasing by 48bp yoy and 70bp yoy to 4.6% of sales and 17.0% of sales respectively. Owing to lower raw material cost, the EBITDA margin expanded by 342bp yoy to 23.9%. Depreciation expense has increased by 33.1% yoy to Rs.1 5cr due to change in the depreciation policy and, other income increased by 334.7% to Rs.13.1cr. The non-current investment has increased from Rs.37cr to Rs.199cr in 2HFY2015 which might have resulted in higher other income. Owing to better operating performance and higher other income, the net profit increased by 109% yoy to Rs.23cr bettering our estimate of Rs.18cr.
For FY2015, the consolidated top-line increased by 2.8% yoy to Rs.1,329cr. The raw material cost increased by 274bp yoy to 62.0% of sales. However, employee expense and other expenses declined by 268bp yoy and 126bp yoy to 10.8% and 14.5% of sales respectively. As a result, the EBITDA margin during the year expanded by 120bp yoy to 12.8% and EBITDA came in at Rs.170cr. Interest expense has increased by 9.2% yoy to Rs.81cr and depreciation has increased by 16.2% yoy to Rs.72cr. Consequently, the adjusted net profit improved to Rs.16cr in FY2015 against Rs.14cr in the previous year.
At current market price, the stock is trading at 1 0.9x its consolidated FY2017E earnings. We maintain our Buy recommendation on the stock with a revised target price of ?87 based on a target P/E of 14.0x for FY2017E.
Economic and Political News
- Duty Refund Claims Hit Rs.6,423cr, exports Hurt: Trade Body
- Direct tax collection in 2014-15, 14% short of target
- Guidel ines for Smart City project likely to be finalized soon
Corporate News
- NTPC signs pact with Jharkhand govt for Patratu power station
- Aditya Birla Group Branded Apparel Businesses to be Moved Into One Unit
- Coal India registers 10.7% yoy growth in production in April
- HCC to repay Rs.200cr debt, explore sale of BOT projects
Contributed by Angel Broking
Sections
Categories