• Indian stock market and companies daily report (May 28, 2015, Thursday)

    Indian markets are expected to open on a flat note tracking the SGX Nifty.

    Following the sell-off seen in the previous session, U.S. markets showed a substantial rebound over the course of the trading day on Wednesday. The strength on U.S. markets was due to bargain hunting on the heels of the steep drop seen in the previous session, which came amid concerns about the outlook for interest rates.

    European markets ended Wednesday's session in positive territory. Buying interest was generated by optimistic comments from Greek Prime Minister Alexi Tsipras regarding his nation's negotiations with creditors.

    The Indian markets closed on a flat note on Wednesday as expectations that the RBI will likely cut rates once again on June 2 helped offset some disappointing earnings and worries over the pace of future Fed rate hikes.


    Markets Today

    The trend deciding level for the day is 27,508 / 8,318 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 27,652 - 27,740 / 8,359 - 8,383 levels. However, if NIFTY trades below 27,508 / 8,318 levels for the first half-an-hour of trade then it may correct towards 27,420 - 27,276 / 8,294 - 8,254 levels.


    Result Review

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

    For 4QFY201 5, Indoco Remedies posted sales of '21 2cr V/s '219cr expected and '186cr in 4QFY2014, a yoy growth of 13.8%, driven by domestic sales. Domestic market posted sales of '129cr, registering a growth of 17.1% yoy, driven by domestic formulation ('123cr) a yoy growth of 16.7% yoy, while API ('61.4cr) a yoy growth of 25.8%. Exports ('82cr), on the other hand grew by 9.0% yoy, with formulation exports ( '75cr), a yoy growth of 9.9%, while export API, posted a flat growth to end the period at '6.84cr.

    On the operating front, the EBITDA margins came in at 1 8.4% V/s 1 7.3% expected and 18.9% in 4QFY2014, a dip of 46bps yoy. This came inspite of a 78.2% rise in R&D expenditure, on back of the 1.0% rise in the employee expenses. R&D expenses, during the quarter was 3.5% V/s 2.2% in 4QFY2014. Also, during the quarter the deprecation expenses rose by 59.2%, which aided the Adj. PAT, to come in at '19cr V/s '20cr in 4QFY2014, a growth of 1.1% yoy. We maintain our neutral rating on the stock.

    Abbott India (CMP: '3,876/ TP: '4,080 -/ Upside: 5.3%)

    For 4QFY2015, Abbott India reported numbers that were below our estimates. The adjusted top-line for the quarter improved by 20% yoy to '593cr, which was lower than our estimate of '613cr. The adjustment was related to other operating income for the quarter amounting to '8cr, which was received on account of settlement agreement with a vendor to change the terms of distribution arrangement. The raw material cost for the quarter increased by 173bp yoy to 58.7% of sales but this was made up by 92bp yoy and 71bp yoy decline in employee cost and other expenses to 12.9% and 18.2% of sales respectively. This resulted in EBITDA margin declining by 10bp yoy to 10.1%, against our estimate of 14.8%. Owing to the above mentioned '8cr other operating income from change in distribution arrangement, the other income increased by 130.6% yoy to '22cr. Consequently, the adjusted net profit came in at '44cr vis-a-vis our expectation of '65cr.

    At the current market price, the stock is trading at PE of 26.6x its FY2017E earnings. We maintain our Accumulate rating on the stock with a revised target price of '4,080 based on target PE of 28.0x for FY2017E.


    Result Preview

    Aurobindo Pharmaceuticals (CMP:'1339/TP:'1502/Upside: 12.1)

    For 4QFY2015, Aurobindo Pharmaceuticals is expected to post sales of '2807cr V/s '2306cr in 4QFY2014, a yoy growth of 21.8%, driven by acquisition. On the operating front, the EBITDA margins are expected to come in at 14.5% V/s 31.2% in 4QFY201 4, a dip of 1 6.7% yoy. The Adj. PAT, to come in at '189cr V/s '51 1cr in 4QFY2014, a dip of 62.9%. We maintain our accumulate rating on the stock, with a price target of '1,502.

    Amara Raja Batteries (CMP: ' 864/ TP: '/Upside: )

    Amara Raja Batteries Ltd would announce 4QFY201 5 results today. We expect revenues to grow 23% yoy to '1,088 cr. Market share gains in the automotive segment coupled with revival in the industrial space is expected to boost the topline. Operating margins would improve 150 bp yoy to 17% on back of operating leverage. EBIDTA is likely to grow healthy 35% yoy to '185 cr. Strong operating performance would boost the profitability. We estimate Net Profit to grow 28% yoy to '108 cr.


    Economic and Political News

    - Publ ic debt rises 0.9% in Jan-March quarter

    - RBI may cut repo rate by 25 bps on June 2: Assocham

    - No going back on Land Bill, open to changes, says Social Justice Minister


    Corporate News

    - Zee Learn posts '3.81cr profit in Q4

    - M&M to launch nine vehicles this year

    - Infosys hopeful of meeting $20bn revenue target by 2020: Sikka

    Contributed by Angel Broking
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