• Indian stock market and companies daily report (August 05, 2015, Wednesday)

    Indian markets are expected to open flat with positive bias tracking SGX Nifty.

    U.S. stocks closed lower Tuesday, but off the session lows hit when one of the Fed president indicated that September interest-rate hike is likely unless there is a significant deterioration in the economy.

    FTSE 1 00 was down as Standard Life shares were lower by 3.3% after it said that its annuities business suffered from recent pension reforms.

    Markets corrected on profit booking post RBI announced its 3rd bio-monthly policy review. In a volatile trading session, Sensex plunged more than 300 points intraday and Nifty breached 8500, but managed to cut losses in later part of the session. Index heavyweights Infosys, Reliance, ITC and HDFC twins dragged the market, but select banks and metals & mining stocks supported.


    Markets Today

    The trend deciding level for the day is 28,068 / 8,510 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 28,269 - 28,466 / 8,572 - 8,627 levels. However, if NIFTY trades below 28,068 / 8,510 levels for the first half-an-hour of trade then it may correct towards 27,870 - 27,669 / 8,455 - 8,393 levels.


    Alstom T&D bags '232cr orders from Power Grid

    Alstom T&D India (ATDIL) announced that it has bagged '231.7cr worth of orders from Power Grid Corporation of India Ltd (PGCIL) for the supply of transformers and shunt reactors.

    ATDIL has been awarded 3 new contracts to supply transformers and shunt reactors for 765/400kV substation at Agra, U.P and spare units for 765kV transformers and reactors as part of Eastern and Southern Region strengthening schemes.

    Products for these 3 contracts would be delivered from Alstom T&D's factory at Vadodara.

    At 1QFY2016-end, ATDIL was sitting on an Order Book of '8,100cr, reflecting OB/LTM sales ratio of ~2.0x.


    Result Review

    MM Forgings (CMP: '693/ TP: '797/ Upside: 15.1%)

    For 1QFY2016, the company reported numbers that were below our estimates. The top-line during the quarter de-grew marginally by 0.3% yoy to '124cr. The same was below our estimate of '144cr. The raw material cost declined by 546bp yoy to 39.3% of sales, but the benefits were offset by an increase in employee cost, power costs and other expenses. Employee costs, power costs and other expenses rose by 275bp yoy, 154bp yoy and 176bp yoy to 11.4%, 11.0% and 16.8% of sales, respectively. As a result, the EBITDA margin witnessed a decline of 59bp yoy to 21.6%, which is below our estimate of 22.7%. Consequently, the net profit declined by 2.4% yoy to '13cr vis-a-vis our expectation of '16cr.

    At current market price, the stock is trading at 10.4x its FY2017E earnings. We have a Buy rating on the stock with a revised target price of ?797 based on a target P/E of 12.0x for FY2017E.

    JK Tyres Ltd (CMP: '123/ TP: /Upside

    JK Tyres Ltd 1QFY2016 results were ahead of estimates. Revenues declined 5% yoy to '1,777cr v/s expectations of '1,857cr. Subdued demand in the truck replacement segment coupled with surge in Chinese imports impacted the topline. However, JKT posted a record multi-year high operating margin of 16.7% which beat our estimates of 14.6%. The margins were boosted by lower raw material costs (softness in both the key raw material viz rubber and crude derivatives). Buoyed by a robust operating performance, the Net profit at '118cr more than doubled on yoy basis and was ahead of our expectations of '111cr. We currently have Neutral rating on the stock and would review estimates post management interaction.


    Economic and Political News

    - RBI holds rate but says open to cuts

    - US renews GSP benefits for Indian exporters

    - After auction, only 6 coal blocks resume output

    - Govt hopes to make Swiss Challenge work for railways


    Corporate News

    - Britannia to ramp up rural distribution, manufacturing

    - Sterlite wants land to set up LCD panel factory

    - Klesch Group drops plans to buy out Tata Steel unit

    - DLF seeks shareholders nod to raise up to '7,500cr

    Contributed by Angel Broking
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