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Indian stock market and companies daily report (February 08, 2010, Monday)

Contributed by Angel Broking

By Angel Broking

The NSE and the BSE held a special, 90-minute trading session on February 6, 2010, to enable the NSE to test an upgraded trading system. The benchmark indices jumped during this session, tracking a strong intraday rebound of US stocks on the 5th of February. Metal, realty, infrastructure, IT, auto and banking stocks gained. All the sectoral indices on the BSE were in the green. The BSE Sensex and the NSE Nifty surged by 0.8% each. The BSE Mid-cap and Smallcap indices were up by 1.4% and 1.5%, respectively. Among the front-liners, Hindalco, JP Associates, Sterlite, DLF and Infosys were up by 2-2.4%, while Hero Honda and Bharti Airtel were down by 0-0.2%. In the mid cap segment, Asian Star, United Breweries, Info Edge India, Ipca Labs and Infotech Enterprises were down by 2-4%, while Indraprashtha Gas, Gujarat Gas, Spice Comm., Monsanto India, and Eicher Motors were up by 7-12%.

Markets Today

The trend deciding level for the day is 15891 / 4746 levels. NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 15975 - 16035 / 4779 - 4801 levels. However, if NIFTY trades below 15891 / 4746 levels for the first half-an-hour of trade then it may correct up to 15832 – 15748 / 4724 – 4691 levels.

ABG Shipyard – Company Update

ABG Shipyard (ABG), the largest private shipbuilder in India, is well poised to benefit on the recovery in sea-borne trade, increasing freight rates and strong capex lined up in the offshore segment, which will provide fillip to fresh order inflows. ABG’s total order book stands at Rs12,660cr, of which the unexecuted order book is around Rs8,700cr and is executable by FY2014E. This translates to 5.6x FY2010E revenues, thus providing strong revenue visibility. Further, we expect a cash inflow of Rs1,000cr by FY2011 through a stake sale in Great offshore, the payment from Essar (financial closure has been done with IDBI by Essar) and the release of Rs140cr from the Government in the form of the subsidy which will ease leverage.

At the CMP, ABG is trading at 7.8x FY2012E earnings, EV/EBIDTA of 8.1x and 1.4x P/BV, according to its FY2012 estimates. We value ABG Shipyard at 8x P/E on FY2012E earnings (ex-subsidy), in line with global peers. We are also valuing ABG's 15% stake (Rs36/share) in Great Offshore on the CMP, giving a 20% holding company discount; based on this, our target price works out to Rs354 per share. We recommend an Accumulate on ABG Shipyard. There could be another 25% upside to our fair value in case of a faster disbursement of subsidy.

Rel MediaWorks objects to INOX’s Fame buy price

Reliance MediaWorks has objected to the acquisition of Fame India by INOX Leisure, at a price of Rs44 per share on February 4, on the ground that the price was lower than a competing bid from it. ADAG informed that it had offered a higher price of Rs80 per share. The CEO of Reliance MediaWorks admitted that the owners of Fame India had the right to sell their 43% stake to whoever they wanted, but alleged that minority shareholders had lost out because they had rejected the higher offer by the ADAG company. The stock is currently under review as we await further clarity in this deal.

Economic and Political News
- Railway infrastructure projects go off track
- Infra investment doubles to 8% in 5 years: Plan Panel
- Govt. to set up Rs4,000cr international shipyard

Corporate News
- NTPC's Tapovan Vishnugad project hits roadblock
- Pipavav to ramp up headcount by 8,500 in 3 yrs
- Kingfisher Airlines hires US firm to revamp ops