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Indian stock market and companies daily report (April 29, 2014, Tuesday)
The Indian Markets are expected to open flat today tracking SGX Nifty and mixed opening in the Asian markets.
The US market saw considerable volatility over the course of the trading day on Monday following the sharp pullback on Friday. The buying interest seen in the market was mainly because of the upbeat corporate and economic news, however, the lingering worries about Ukraine weighed on the markets. The report from the National Association of Realtors showing that U.S. pending home sales rebounded by much more than anticipated in the month of March also provided some positive sentiment in the investors. Meanwhile, the European markets ended in positive territory on Monday, despite concerns about Ukraine, buoyed by merger and acquisition news that AstraZeneca ended takeover discussions with Pfizer Inc. despite a $100 billion offer.
Back home, the Indian markets posted modest losses on Monday as weak global cues amid escalating concerns about the Ukraine crisis which prompted traders to sit on the sidelines after recent sharp gains.
The trend deciding level for the day is 22,650 / 6,766 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 22,703 - 22,774 / 6,782 - 6,802 levels. However, if NIFTY trades below 22,650 / 6,766 levels for the first half-an-hour of trade then it may correct 22,579 - 22,526 / 6,746 - 6,730 levels.
Cipla - NPPA issues fine for overcharging on drugs
The National Pharmaceutical Pricing Authority (NPPA) recently issued fresh showcause notices to the company, imposing a Rs.105cr fine .The charge was that Cipla sold Cipro injection and Ciplox in the market allegedly at a price more than what was fixed. Another penalty decision of a little and Cipro are brands based on the ciprofloxacin formulation. This is an antibiotic belonging to the quinolone family of medicines, used to treat infections caused by certain bacteria. Most commonly, for infections of the skin, sinuses, bone, lung, ear, abdomen, kidney, prostate and bladder. The drug can also be used to treat some sexually transmitted infections, some forms of infectious diarrhea and typhoid fever. The extended release form of ciprofloxacin is used to treat bladder and kidney infections. Over Rs.1,700cr is pending against the company the notices were issued this January), with similar allegations of overcharging on several medicines. While, It's possible that the company might take this issues to court. However, if the company had to pay up, it will be able to service the same , given the comfortable Debt; Equity. We maintain our buy on the stock, with a price target of Rs.495.
Aurobindo Pharma faces patent infringement cases in U.S
Three multinational drug makers — The Medicines Company, Hospira and Kowa Company Ltd — in separate cases — have dragged Indian firm Aurobindo Pharma to court on allegations of patent infringement.
According to the petition copies, Hospira has alleged that Aurobindo Pharma's Abbreviated New Drug Application (ANDA) to make generic version of dexmedetomidine hydrochloride injection would infringe its patented drug Precedex. Hospira filed the petition in the U.S. District Court of Delaware. The drug is used for the sedation of initially intubated and mechanically ventilated patients during treatment in an intensive care setting.
Similarly, the Medicines Company in a separate petition filed in the District Court of New Jersey alleged that the Indian drug maker's ANDA would infringe on its drug, Angiomax, on two counts. Angiomax (bivalirudin) is used as an anticoagulant in patients with unstable angina undergoing percutaneous translurninal coronary angioplasty.
Kowa in its petition filed in District Court of Southern District of New York alleged that Aurobindo Pharma's recent ANDA with U.S. Food and Drug Administration would infringe on its patented drug Livalo (Pitavastatin) on four counts. Pitavastatin is used as an adjunctive therapy to diet to reduce elevated total cholesterol, low-density lipoprotein cholesterol, apolipoprotein B, triglycerides, and to increase high-density lipoprotein cholesterol.
These, cases are in the initial stages and hence wonRs.t have any immediate impact on the financials and the target. We maintain, our accumulate, with a target price of Rs.616.
HUL (CMP: Rs.581/ TP:-/ Upside:-)
For 4QFY2014 HUL's bottom-line performance was below estimates. Top-line rose by 8.9% yoy to Rs.6,935cr. Domestic consumer business rose by 9% yoy with a volume growth of 3% yoy. Soaps and Detergents division posted a growth of 9.6% yoy aided by price hikes in the skin cleansing segment and healthy growth in premium products in laundry segment. Personal products division posted a 8.3% yoy growth. Beverages division posted a growth of 7.5% aided by double digit growth in tea. OPM (excl. other operating income) fell by 46bp yoy to 13.3% due to increase in staff costs and other expenses. During the quarter the company had exceptional income of Rs.66cr arising out of sale of properties and reduction in provision for retirement benefits. After adjusting for the exceptional income, the company's net Profit rose by a modest 7% yoy to Rs.832cr. We maintain a neutral rating on the stock.
Idea Cellular (CMP: Rs.141/ TP: Under review)
For 4QFY2014, Idea Cellular (Idea) reported broadly strong set of results which stood ahead of our estimates on all fronts. Idea's consolidated revenue grew by 6.5% qoq to Rs.7,044cr. Wireless revenues were up 5.3% qoq Rs.6844cr - a combination of 8.6% qoq volume growth and 3% ARPM decline. ARPU stood at Rs.173/sub/month, up 2.4% qoq and 3.6% yoy. MOU expanded by 5.6% qoq to 397min. Total voice traffic for the quarter came in at 157bn minutes, up 8.6% qoq and 9.5% yoy. Voice RPM declined by 3.5% qoq to 36.4 paise/min as Idea reversed some of the price increases, especially in its new circles. In terms of data services, Idea witnessed 31% qoq and 140% yoy growth in data volumes to 27.3bn MB. Data revenues grew by 12% qoq Rs.690cr (~10% of revenues). Idea's EBITDA margin increased by ~60bp on a sequential basis to 31.7%, due to increase in marketing and subscriber acquisition costs. PAT stood tall at Rs.590cr, up ~25% qoq, led by strong revenue growth. The stock is currently under review.
Godrej Consumer (CMP: Rs.783/ TP:-/ Upside:-)
For 4QFY2014, Godrej Consumers (GCPL) posted a lower than estimated 12.2% yoy growth in top-line to Rs.1,924cr. The company's domestic and international business posted revenue growth of 12% yoy each. On the domestic front, Household insecticides and hair colours businesses posted growth of 17% yoy and 16% yoy respectively. Soaps category posted a value growth of 1%, while volumes de-grew by 4%. While Indonesian business posted a flat performance on the topline front, Africa, Europe and Latin America posted growth of 39%, 16% and 5% respectively. OPM came in higher than estimates at 17.4% aided by lower other expenses. Price hikes carried out by the company in Indonesian business aided the 132bp yoy increase in OPMs of the company. The company's bottom-line rose by 13.5% yoy to Rs.232cr aided by superior operating margins. We maintain a neutral rating on the stock.
Alembic Pharmaceuticals (CMP: Rs.296/ TP:-/ Upside:-)
For 4QFY2014, the company, net sales came in at Rs.463cr V/s expected Rs.492cr, a yoy growth of 23.0%.The sales growth was driven by exports. The domestic sales grew by 14% yoy, while exports grew by 58.6% yoy. The exports grew on account of the international generics and branded which grew by 99% and 32% yoy respectively. On the operating front, it posted EBIDTA margins of 19.6% V/s expected margins of 18.7%, an expansion of 230bps.On the net profit front, the company posted net profits of Rs.61.3cr V/s expected Rs.70cr, a yoy growth of 40.1%. We maintain our neutral on the stock.
Federal Bank (CMP: Rs.94/ TP: Rs.110/ Upside: 17.3%)
Federal Bank is slated to announce its 4QFY2014 results today. We expect the bank to report healthy Net Interest Income (NII) growth of 18.1% yoy to Rs.567cr. Non-interest income is expected to de-grow by 4.3% yoy to Rs.188cr. Operating expenses of the bank are expected to be higher by 15.1% yoy to Rs.354cr thus operating profit is expected to de-grow by 8.6% yoy. Provision expenses are expected to lower at Rs.50cr as compared to Rs.98cr in 4QFY2014. Overall earnings are expected to grow by 5.9% yoy to Rs.235cr. At the CMP, the stock trades at a valuation of 0.9x FY2015E. We maintain Buy rating on the stock.
TVS Motor (CMP: Rs.87/ TP: Rs.104/ Upside: 20%)
TVS Motor Company (TVSL) is scheduled to announce its 4QFY2014 results today. We expect the company to register a robust ~24% yoy growth in net sales to Rs.2,200cr led by ~10% and ~13% yoy growth in volumes and net average realization respectively. EBITDA margins are expected to improve ~100bp yoy to 6.3% on the back of strong growth in exports and superior product-mix.
Consequently, bottom-line is expected to witness a strong growth of ~37% yoy to Rs.79cr. At the CMP, the stock is trading at 10.9x FY2016E earnings. Currently, we have a Buy rating on the stock with a target price of Rs.104.
Economic and Political News
- Automobile slump stoking labour unrest at companies
- Retail sector to grow at 17%, highest after two years: Report
- CBM producers canRs.t charge more than natural gas: Oil Min
- Tata Motors gears up for launching Zest, Bolt
- GMR Energy withdraws IPO plan, as objects in the offer are changing
- JSPL commissions 2 MTPA steel plant in Oman
- Wal mart paid US$334mn to end India partnership
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