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Indian stock market and companies daily report (November 19, 2009, Thursday)

Contributed by Angel Broking

By Angel Broking

Intraday volatility was high, and the market recovered soon after an initial slide. The Sensex and the Nifty pared their gains after hitting one-month highs in mid-morning trade, and once again slipped into the red later. The markets cut their losses in early afternoon trade, after the FM announced that the current higher capital inflows are not a matter of concern. Volatility ruled the roost in late trade as the benchmark indices edged lower, as investors took home cash after the recent, sharp spurt  in share prices. Metal stocks rose, but capital goods and banking stocks fell. The Sensex and Nifty were down by 0.3% and 0.2%, respectively. The BSE Mid-Cap and Small-Cap Indices were up by 0.3% and 0.8%, respectively. Among the front liners, Tata Motors, Tata  Steel, ITC, Infosys and Jaiprakash Associates gained between 2-4%, while Reliance Infrastructure, L&T, ICICI Bank, RIL, Grasim Industries lost between 1-3%. In the Midcap segment, Asian Star, Essar Ship Ports, BOC India, Pantaloon Retail and Maharashtra Seamless gained between 5-17%, while Mphasis, Exide Industries, BF Utilities, REI Six Ten Retail and KGN Industries lost between 3-5%.

Markets Today
The trend deciding level for the day is 5059 / 17019. NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 5075 – 5096 / 17079 - 17159. However, if NIFTY trades below 5059 / 17019 for the first half-an-hour of trade then it may correct up to 5038 – 5021 / 16939 – 16878.

RIL to invest US $3bn in new Petrochem complex
RIL is planning to spend US $3bn for a new Petrochemical complex at Jamnagar. The new complex will utilise residual gases generated from the two existing refineries, of which one is located in a special economic zone (SEZ), to generate further downstream products. With this addition, RIL will be adding 2MMTPA, and taking its overall output capacity of olefins and matching downstream capacities to 4MMTPA. The investment could be in the range of US $3bn, depending on raw material prices. However, the decision on whether the new complex will come up inside the SEZ or outside is yet to be finalised. The project will come up in two phases. The first phase will see recovery of ethylene gases from various units in the refineries and this will be used to produce low density polyethylene (LDPE). The second phase will see recovery of ethane and propane from the residual gases, besides setting up a cracker unit to further produce products like ethylene and propylene. Various downstream products like low LDPE and mono ethylene glycol can be produced from this unit. We maintain a Buy on RIL, with a target price of Rs2,340.

Lloyd Electric acquires assets of Janka Radotin
Lloyd Electric, through its wholly-owned subsidiary, Janka Engineering SRO, has signed a pact with Janka Radotin AS, for acquiring all its assets, for a consideration of Euro 3.66mn (~Rs25cr). Czech-based Janka Radotin AS is engaged in the manufacturing of diversified air-handling products. An air handler, or air handling unit (often abbreviated to AHU), is a device used to condition and circulate air as part of a heating, ventilating, and air-conditioning (HVAC) system. Notably, Lloyd is the largest manufacturer of AC coils in India and also manufactures completely built units of ACs on a contract basis. Most of the AC manufacturers in India feature in the client list of Lloyd. At the CMP, the stock trades at 3.7x its FY2011E EPS of Rs15.1. The company enjoys excellent positioning in the AC market in India. We maintain our Buy on the stock, with a Target Price of Rs76.

Pratibha Industries secures work order worth Rs294cr
Pratibha Industries (PIL) is an infrastructure firm engaged in the business of integrated infrastructure solutions and the manufacturing of HSAW pipes. PIL has bagged an order amounting to around Rs294cr, relating to the ‘Meerut Water Supply project’, from the U.P. Jal Nigam. The project has various components, viz., 1) 100 MLD water treatment plant with PLC / SCADA, 2) the laying of 1,500 mm to 500 mm diameter PSC pipe feeder mains, 3) RCC overhead tank, 4) the laying and commissioning of distribution systems and rising mains, 5) tube wells, and 6) pump houses, including operation and maintenance for five years. The Project is to be executed within a time span of 24 months, inclusive of four months of a trial run. The order book stands at around Rs2,700cr or 2.4x its FY2010E revenues. At Rs262, the stock trades at 6.3x FY2011E P/E and at 1.3x FY2011E P/BV. The stock has run up substantially and, hence, we recommend a Neutral view.

Economic and Political News
- AAI to raise Rs1,200cr for airport upgradation
- NHAI slashes number of projects for FY2011 to 92
- NHAI wants dividend tax for SPVs out
- Infra play gets a push, IIFCL ties up US$700 mn at sub-Libor rates

Corporate News
- L&T JV to bid for Oman airport
- ITC raises prices of select premium brands by almost 10%
- Wockhardt plans preferential issue