Indian stock market and companies daily report (May 27, 2015, Wednesday)

Indian markets are expected to open on negative note tracking the SGX Nifty and most of its Asian peer.

U.S. markets closed in negative territory on Tuesday on back of rate hike expectation in U.S.

The majority of the European markets ended Tuesday's session in negative territory due to investor concerns over Greece defaulting on its debt repayments.

The Indian markets fell for a second consecutive session on Tuesday against the backdrop of Fed rate hike concerns.


Markets Today

The The trend deciding level for the day is 27,560 / 8,346 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 27,647 - 27,763 / 8,372 - 8,405 levels. However, if NIFTY trades below 27,560 / 8,346 levels for the first half-an-hour of trade then it may correct towards 27,445 - 27,358 / 8,313 - 8,287 levels.


Result Review

Tech Mahindra (CMP: '641/ TP: '825 / Upside: 28.7)

For 4QFY2015, Tech Mahindra announced results much lower than expectations, mainly on the EBDITA and net profit front. The sales came in at US$984mn V/s US$989mn, expected V/s US$924mn, a qoq growth of 6.5%. Revenue contribution from its acquisitions like LCC & SOFGEN was at US$1 00mn rupee terms, adjusting for which the qoq de-growth was 4.3%.

In rupee term, the company, posted sales of '611 7cr V/s '6159cr expected V/s '5752cr during 3QFY2015, qoq growth of 6.3%. On the operating front, the EBITDA margins came in at 15.2% V/s 18.4% expected and V/s 20.2% in 3QFY2015, a dip of 499bps qoq. On the reason for the dip in the EBDITA margins are the utilization levels, which came in at 71% V/s 74% in 3QFY2015. Thus, Adj. PAT, came in at '472cr V/s '751cr expected and V/s '777cr, a qoq degrowth of 39.2%. Apart from the lower than expected EBDITA margins, a Forex loss of '154.1cr booked also impacted the net profit during the quarter. We maintain our buy rating on the stock.

Tata Motors Ltd (CMP: '497/ TP: Under Review)

Tata Motors 4QFY2015 results were below estimates on account of lower than expected operating performance at JLR and MTM loss provisioning at JLR (on commodity hedges and revaluation of foreign currency debt). Consolidated revenues at Rs '67,576 cr were in line with estimates. However, Tata Motors disappointed on the operating front reporting a margin of 12.5% as against our expectations of 15.9%. Domestic operations surprised positively (with margins at 1.5% which is higher than our expectations of -1.9%). However, JLR margins at 17.4% were lower than our estimate of 19.2% which dragged the overall margin performance. Also, JLR realized MTM loss on commodity hedges and revaluation of foreign currency debt to the tune of GBP 220 mn (about '2,100 cr) which further dented profitability. Adj PAT at '1,824 cr was significantly lower than our estimate of '4,481 cr. Currently, we have Buy rating on the stock but would review our estimates post interaction with the management.

Setco Automotive Ltd (CMP: ' 254/ TP: ' 286/Upside:13% )

Setco Automotive 4QFY2015 results were below estimates on back of lower revenue growth and operating performance. Revenues grew 19% yoy to '130 cr on back of robust MHCV sales but were lower than our expectations of '140 cr. Operating margins at 9.7% improved 90 bp yoy but missed our estimates of 13.9%. Increase in the raw material expenses led to lower than anticipated margins. Given the miss on the operating front, Net Profit at '3 cr was lower than our estimates of '7 cr. We currently have Accumulate rating on the stock.


Result Preview

Indoco Remedies (CMP: '390/ TP: / Upside

For 4QFY2015, Indoco Remedies is expected to post sales of '219cr V/s '1 86cr, a yoy growth of 17.9%, driven both by exports and domestic sales. On the operating front, the EBITDA margins are expected to come in at 17.3% V/s 18.9% in 4QFY2014, a dip of 161bps yoy. Thus, Adj. PAT, is expected to come in at '19cr V/s '20cr in 4QFY2014, a growth of 2.3% yoy. We maintain our neutral rating on the stock.


Economic and Political News

- Trade unions officially declare national strike to protest labour reforms

- Direct transfers likely to help govt save '5,060 cr in LPG subsidy

- Government approves land pooling regulations


Corporate News

- Tata Capital picks up minority stake in TVS Group's logistics arm for '250cr

- Suven Life Sciences Q4 net falls 47% to '17cr

- IL&FS Transport lowest bidder for '315-cr road projects in MP

Contributed by Angel Broking