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Reports India

Indian stock market and companies daily report (August 13, 2014, Wednesday)

August 13, 2014, Wednesday, 05:48 GMT | 00:48 EST | 09:18 IST | 11:48 SGT
Contributed by Angel Broking

Indian markets expected to open negative tracking SGX Nifty on account of weak IIP data as well as CPI data.

US markets closed modestly lower and remain subdued throughout the session partly offsetting the previous day gains. This was mainly due to lingering geopolitical concerns in Ukraine. The market was on wait and watch mode with release of some key data in coming days

European market closed negative on account of weak German data. The markets remained lower throughout the trading session trimming the gains from previous two sessions which was backed by mixed signals from Ukraine and potential increase in conflict with Russia.

Indian markets rallied closed at highest point on account of easing cues of the geopolitical concerns on Iraq and hopes of conflicts in Ukraine easing. The market remained strong lead by bargain hunting.

Markets Today

The trend deciding level for the day is 25,810 / 7,706 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 25,975 - 26,070 / 7,757 - 7,787 levels. However, if NIFTY trades below 25,810 / 7,706 levels for the first half-an-hour of trade then it may correct 25,716 - 25,551 / 7,676 - 7,625 levels.

Result Review

Sun Pharma (CMP: Rs.784/ TP: - / Upside: - )

For the 1 QFY201 5, the company posted results lower than expectations on sales and net profit front, while OPM came in higher than expectations. Sales during the quarter came in at Rs.3,927 cr, a yoy growth of 13% over same quarter last year. This was lower than the expectations of Rs.4200cr.Branded generic sales in India at Rs.992cr, up by 17% yoy over last corresponding period. US finished dosage sales at US$ 389mn grew by 7% (in US$ terms). The US sales were mainly due protection charge of US $55mn, taken by Taro during the quarter. International formulation sales outside US at US$ 82 mn, grew by 2% (in US$ terms) over last corespondent period. Overall international revenues accounted for more than 75% of total revenues for the quarter. On the operating front, the EBITDA came in at Rs.1,724 cr grew by 13%; resulting EBITDA margin of 44%, same as 1QFY2014. This was higher than 41.8% expected. Thus the Adjusted Net profit at Rs.1,391cr a growth yoy of 12% over 1QFY2014. This was lower than Rs.1,428cr expected.Reported Net profit at Rs.1,391cr, compared to Net loss of Rs.1,276cr in 1QFY2014. The reported net profit was lower than the expected net profit inspite of higher than expected OPM, On back of higher taxation during the period and lower than expected sales during the period. we remain neutral on the stock.

Kirloskar Oil Engines (CMP: Rs.246/ TP: Rs. 290/ Upside: 18%)

Kirloskar Oil Engines (KOEL) reported mixed set of numbers for 1QFY2015. The top-line has come in line with our expectations at Rs.639cr, 9.5% higher yoy. However, the operating margin contracted by 125bp yoy to 11.8%, against our estimate of 13.1%. The disappointment was mainly because of higher-than-expected raw material cost as a percentage of net sales. Consequently the company reported a net profit of Rs.47cr, lower 10.6% on a yoy basis, and against our estimate of Rs.56cr.

With capacity expansion already in place and minimum capex requirement in near future, we continue to be positive on the company from a longer term perspective. A revival in the economy coupled with operating leverage will be strong driving factors for the company's growth. Hence, we maintain our Buy recommendation on the stock with a target price of Rs.290 with a target PE of 18.0x FY2016E earnings.

Economic and Political News

- Crop l oans waived in Telangana

- Govt may opt for UMPP bidding model for coal mine auctions

- Trai suggests restriction on pol parties, corporates in media

Corporate News

- Uttarakhand gives no relief to Hero group on stamp duty evasion

- Petrol eum Ministry approves 5% stake-sale in ONGC

- FTIL looking to exit Indian Energy Exchange