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Reports India

Indian stock market and companies daily report (April 25, 2014, Friday)

April 25, 2014, Friday, 04:53 GMT | 23:53 EST | 08:23 IST | 10:53 SGT
Contributed by Angel Broking

The Indian Markets are expected to open negative today tracking negative opening on SGX Nifty while most of the Asian markets are trading mixed.

US stocks ended on a mixed note on Thursday as traders weighed upbeat earnings news against concerns about the situation in Ukraine. While Nasdaq closed firmly led by Apple, which posted better-than-expected earnings, Dow Jones ended mostly flat. On the economic front, Commerce Department report on durable goods orders for March showed a better-than-expected increase of 2.6% as against economistsRs. expectations of 2%. Meanwhile, a separate report from the Labor Department showed a bigger than expected increase in weekly jobless claims thereby impacting traded sentiments to some extent.

Back home in India, domestic indices hit fresh record highs on Wednesday, backed by sustained FII buying. Trading on Friday is likely to be impacted by domestic earnings coupled with further developments regarding Ukraine as well as Thomson Reuters and the University of Michigan's final report on US consumer sentiment in April.

Markets Today

The trend deciding level for the day is 22,856 / 6,841 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 22,933 - 22,989 / 6,861 - 6,882 levels. However, if NIFTY trades below 22,856 / 6,841 levels for the first half-an-hour of trade then it may correct 22,800 - 22,724 / 6,821 - 6,800 levels.

Result Review

Cairn India (CMP: Rs.352/ TP: Under Review/ Upside: -)

Cairn India 4QFY2014 adjusted net profit was in line with our estimate. The company's top line increased by 15.7% yoy to Rs.5,049cr (below our expectation of Rs.5,250cr) due to increase in both volumes as well as realizations (in INR terms). The company's gross production averaged 224,429boepd (+11.0% yoy) during the quarter. Gross crude oil realization decreased 5.0% yoy to US$95.7/bbl, although it grew in INR terms on the back of INR depreciation against the USD. EBITDA grew by 18.0% yoy to Rs.3,844cr in line with increase in top-line. The other income increased by 83.4% yoy to Rs.407cr mainly due to increase in investment income realized from gains on maturity of investible funds. The company reported an exceptional forex loss of Rs.243cr. However, tax expenses grew by 182.0% yoy to Rs.164cr which resulted in adjusted net profit growing by 27.9% yoy to Rs.3278cr (in line with our estimate of Rs.3,289r). We maintain our Buy rating on the stock while we keep our target price under review.

Ultratech (CMP: Rs.2,171 /TP: -/ Upside: -)

For 4QFY2014 Ultratech Cement's (Ultratech) top-line rose by 8.2% yoy to Rs.5,832cr aided by 9% increase in cement and clinker sales volume to 12.2mn tonnes. The sale volumes of white cement and wall care putty rose by 1 2.7% yoy to 0.33mn tonnes. Blended realizations fell by 1.2% yoy to Rs.4,662/tonne. OPM fell by 200bp yoy to 21.8% on account of lower realizations and increase in operating costs such as raw material, power and fuel and freight costs. Bottom-line rose by 15.4% yoy to Rs.838cr aided by reversal of excess tax provision of Rs.96cr related to previous years. The Bottom-line performance was alos boosted by higher other operating income of Rs.128cr (vs. Rs.83cr in 4QFY2013). We maintain a neutral rating on the stock.

Ambuja Cements (CMP: Rs.219/TP:-/Upside:-)

For 1QCY2014 Ambuja CementsRs. stand-alone top-line rose by 3.7% yoy to Rs.2,640cr. While realization rose by 2% on yoy basis, volume higher by 1.7% yoy to 6.1mn tonnes. OPM increased by 50bp yoy to 22.2% aided by higher realization and lower other expenses. Adjusted PAT (adjusted for tax credit of Rs.95cr) rose by 14.6% yoy to Rs.425cr. We maintain a neutral rating on the stock.

ACC (CMP: Rs.1,348/TP:1,485/Upside:10.2%)

For 1QCY2014 ACC's stand-alone top-line rose by 2.1% yoy to Rs.2,967cr. While realization rose by 1.3% yoy to 5.85mn tonnes, volume remained flat at 6.48mn tonnes. OPM stood at 14.3%, down 259bp on a yoy basis impacted by higher costs. Adjusted PAT after considering Rs.113cr of tax credit during the quarter fell by 3.7% yoy to Rs.286cr. We maintain an Accumulate rating on the stock with a target price of Rs.1,485.

Yes Bank (CMP: Rs.442/ TP: Rs.514/ Upside:17%)

Yes Bank reported a healthy earnings growth of 18.8% yoy, though ahead of street's but in line with our expectations. Over the last few quarters, the balance sheet growth for the bank has moderated. Even during current quarter, aided by loan book growth of 18.4% yoy, NII for the bank grew 12.8% yoy. NIMs for bank increased by 10bp qoq to 3.0% probably on back of FCNR (B) deposits utilization. Non-interest income registered healthy growth of 17.4% yoy. Operating expenses continued to grow high at 26.3% yoy. On the asset quality front absolute Gross and Net NPAs for the bank decreased by 10.7% and 38.4% respectively qoq on an already low base. Gross and Net NPA ratios for the bank remain well under control and amongst the best in the industry at 0.3% and 0.05%, respectively. The restructured book for bank stands at 0.18% of gross advances with no new fresh restructuring during the quarter. Lower provisioning expenses at Rs.72cr as compared to Rs.98cr in 4QFY2013 enabled bank to register earnings growth of 18.8% yoy. At CMP, the stock trades at 1.5x FY201 6E ABV which is at a lower end as compared to other private peers. We recommend Buy rating for the stock with a target price of Rs514.

FAG Bearings (CMP: Rs.2,041/ TP: Under review/ Upside: - )

For 1QCY2014, FAG Bearings reported strong set of results primarily driven by strong improvement in operating margins. The top-line posted an in-line growth of 20.5% yoy to Rs.401cr led by pick-up in automotive sales in a seasonally strong quarter. EBITDA margins improved sharply by 130bp yoy to 13.9%, better than our expectations of 12.6%, largely due to savings on the raw-material cost front. The proportion of traded goods as a percentage of sales declined 240bp yoy which aided margin expansion during the quarter. Consequently, operating profit and net profit surged 34.4% and 36.3% yoy to Rs.56cr and Rs.35cr respectively. At the CMP, the stock is trading at 15.6x CY2015E earnings. We maintain our positive view on the stock; however, our target price is currently under review.

South Indian Bank (CMP: Rs.25/ TP: Rs.30 / Upside: 22%)

South Indian Bank reported operating performance below our estimates, while asset quality witnessed improvement qoq. On the operating front, Net Interest Income for the bank came largely inline at Rs.365cr, while non-interest income unexpectedly de-grew by 20.2% yoy, leading to a largely flat operating income yoy. Operating expenses grew 3.1% yoy to Rs.256cr, in-line with expectations. Preprovisioning remained largely flat yoy to Rs.205cr. On the asset quality front, the bank reported ~22% decline in absolute Gross NPA while 28.1% decline in absolute net NPA levels. Provisioning expenses came in at just Rs.28cr as compared to Rs.66cr in 4QFY2014. Overall earnings de-grew by 19.0% yoy to Rs.125cr. At the CMP, the stock is trading at 0.8x FY2016E ABV. We recommend Buy rating on the stock, with a target price of Rs.30.

Result Preview

ICICI Bank - (CMP: Rs.1,299 / TP: Rs.1,606 / Upside: 23.6%)

ICICI Bank is scheduled to announce its 4QFY2014 results today. We expect the bank to report a healthy NII growth of 16.4% yoy to Rs.4,425cr. Non-interest income is expected to grow strong by 27.8% yoy to Rs.2,822cr. Operating expenses are expected to increase by 15.3% yoy to Rs.2,775cr. Provisioning expenses are expected to increase by 63.1% yoy to Rs.750cr. Overall, we expect the PAT to grow by 13.4% yoy at Rs.2,614cr. At the CMP the stock trades at 1.7x FY2016E ABV. We recommend a Buy rating on the stock, with a target price of Rs.1,606.

Maruti Suzuki (CMP: Rs.1,983/ TP: Rs.2,119/ Upside: 7%)

Maruti Suzuki (MSIL) is scheduled to announce its 4QFY2014 results today. We expect the company to register strong results; yoy performance though is not comparable due to the Suzuki Powertrain India (SPIL) merger during 4QFY2013. MSIL's volumes during the quarter declined ~6% yoy led by continued weakness in consumer sentiments and consequent pressure on PV demand. Sequentially though, the top-line is expected to grow strongly by ~11% to Rs.12,125cr led by ~13% qoq growth in volumes led by seasonality. Net average realization is expected to decline ~1% qoq reflecting the excise duty cut benefits passed on to the consumers. We expect EBITDA margins to decline marginally by 40bp qoq to 12%, leading to a ~8% qoq growth in operating profit. Nevertheless, aided by higher other income, the bottom-line is expected to surge strongly by ~33% qoq to Rs.907cr. At the CMP, the stock is trading at 15x FY2016E earnings. Currently, we have an Accumulate rating on the stock with a target price of Rs.2,119.

Axis Bank (CMP: Rs.1,518 / TP: Rs.1,922 / Upside: 26.6%)

Axis Bank is slated to announce its 4QFY2014 results today. We expect the bank to report a healthy NII growth of 19.3% yoy to Rs.3,178cr, primarily on back of healthy advance growth of 18% yoy. Non-interest income is expected to remain largely flat yoy at Rs.2,069cr. Operating expenses are expected to increase by 13.3% yoy to Rs.2,120cr. Provisioning expenses for bank are expected to be lower by 17.7% yoy to Rs.490cr. Overall the earnings are expected to grow 16.8% yoy during the quarter to Rs.1,817cr. At the CMP, the stock is trading at 1.4x FY2016E ABV. We recommend a BUY rating on the stock with a target price of Rs.1,922.

Bosch (CMP: Rs.10,450/ TP: Rs.11,381/ Upside: 9%)

Bosch (BOS) is slated to announce its 1QCY2014 results today. We expect Bosch to register a healthy top-line growth of ~6% yoy to Rs.2,334cr, largely led by growth in exports and marginal uptick in domestic automotive sales. We expect EBITDA margins to contract ~70bp yoy to 16.6% due to raw-material cost pressures and also due to the impact of INR depreciation on imports. Hence, net profit is expected to post a modest growth of ~3% yoy to Rs.268cr during the quarter. At Rs.10,450 the stock is trading at 23x CY2015E earnings. We maintain our Accumulate rating on the stock with a target price of Rs.11,381.

Exide Industries (CMP: Rs.130/ TP: -/ Upside: -)

Exide Industries (EXID) is slated to announce its 4QFY2014 results today. We expect the company to report poor performance yet again as the industrial battery segment (accounting for ~35% of total sales) continues to witness sluggish sales. Additionally, the company is also losing market share in the replacement segment to Amara Raja Batteries. We expect the top-line to decline ~4% yoy to Rs.1,476cr. The bottom-line is expected to decline ~1 3% yoy to Rs.127cr as EBITDA margins are expected to remain under pressure and register a decline of ~30bp yoy to 13%. At the CMP, the stock is trading at 17.3x FY2016E earnings. Currently, we have a Neutral rating on the stock.

Economic and Political News

- TRAI to soon mandate minimum wireless internet speed

- Government targets over 1,000bn units of power generation in FY201 5

- Coal fi rms should take advance action to renew FSAs in time

Corporate News

- Reliance Industries raises US$550mn from consortium of Japanese banks

- Dr Reddy's launches high cholesterol drug in US market

- Lupin forms JV with Japan's Yoshindo Inc.