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Reports India

Indian stock market and companies daily report (August 14, 2014, Thursday)

August 14, 2014, Thursday, 06:54 GMT | 01:54 EST | 10:24 IST | 12:54 SGT
Contributed by Angel Broking

Indian markets expected to open flat tracking SGX Nifty and Asian markets cues.

US markets closed higher amid easing interest rates worries. However, concerns on same persist including Ukraine geopolitical tensions and Iraq issues. However, it is worth noting that the extent of the buying interest may have been exaggerated by below average trading volume.

European market closed rebound from previous session and ended positive lead by upbeat corporate earnings. This was further backed by easing German inflation data as well as continuous fall in UK unemployment data.

Indian markets were choppy and slightly higher on account disappointing IIP and CPI data. The market remained cautious in the wake of lingering geopolitical concerns on Ukraine.

Markets Today

The trend deciding level for the day is 25,894 / 7,731 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 25,997 - 26,075 / 7,766 - 7,792 levels. However, if NIFTY trades below 25,894 / 7,731 levels for the first half-an-hour of trade then it may correct

Airtel may have to surrender excess spectrum in Mumbai

The company has marginally crossed maximum airwaves holding cap in Mumbai after acquisition of 4G Company Qualcomm founded by US chip maker. The company may need to surrender around 1 Mhz of spectrum for which it will not get any refund or adjustment. However, they will get time of one year to surrender the spectrum, so we expect spectrum auction again.

As per spectrum cap rule, a company cannot hold more than 25% of total spectrum assigned to all companies in a circle and over 50% of total spectrum assigned in a particular frequency band.

The company in Mumbai has been earlier allocated 9.2 Mhz spectrum in 1800 Mhz, widely known as 2G spectrum. The company is February spectrum acquired additional 6 Mhz in 1800 Mhz band for Rs.1,632cr and 5 Mhz in 900 Mhz band for Rs.2,815cr.

Since company has reasonable size of revenue and profits coming from this circle, there will be negative impact on the earnings.

Result Review

Jyothy Laboratories (CMP: Rs.189/ TP: -/ Upside: -)

Jyothy Laboratories (JLL) reported mixed set of numbers for 1QFY2015. The company reported top-line below our expectations however operating margin and profit came above our expectations. The top-line grew by 10.8% yoy to Rs.355cr, 7.8% lower than our estimate of Rs.385cr. The soap and detergent segment registered yoy growth of 14.6% to Rs.292cr while home care segment grew marginally by 2.0% yoy to Rs.59cr. The operating margin for the quarter expanded by 20bp on yoy basis and came in at 15.4%, against our estimate of 13.0%, mainly because of lower than expected other cost. The advertisement cost and selling expense for the quarter stood at Rs.37cr (10.5% of net sales). Consequently, the adjusted profit came in at Rs.52cr during the quarter, 80.5% higher yoy and 33.8% higher than our estimate.

We continue to be positive on the top-line growth of the company, however, on account of the inflationary condition and planned higher advertisement spend we remain cautious on operating margin and hence profitability of the company. We recommend Neutral on the stock.

Dishman Pharma (CMP: Rs.128/ TP: Rs.177 / Upside: 38.3%)

Dishman Pharma, announced numbers better than expected on sales front, but lower than expected on OPM and net profit front. The company posted revenue of Rs.362cr V/s Rs.332cr expected, up 18.1% yoy. On the EBITDA front, OPM's came in at 20.5% V/s 23.0% expected and V/s 27.8% during the last corresponding. The dip in the margins is on back of the 431bps dip in the gross margins (71.1% v/s 75.4% during the last corresponding period) and a 21.3% and 32.8% yoy growth in the staff and other expenditure respectively. Higher depreciation expenditure, during the period, lead the company to post a PAT to come in at Rs.24cr, a yoy degrowth of 18.6% yoy. This was much lower than expected Rs.37cr, on back of higher than expected interest expenditure during the period. We maintain our buy rating on the stock with a price target of Rs.177.

Result Preview

Cipla (CMP: Rs.439/ TP: Rs.480 / Upside: 9.3%)

Cipla, is expected to post robust numbers during 1 QFY2015. For the quarter Cipla is expected posted consolidated sales of Rs.2720cr, (Rs.2308cr in 1QFY2014) a yoy growth of 17.9%. The growth is expected to be lead by both domestic and exports. On the operating front, the EBDITA margins are likely to come in at 24.5% V/s 22.2% during the last corresponding period. Thus the PAT is likely to come in at Rs.575cr, (Rs.485cr in 1QFY2014) registering a yoy growth of 18.6%.We maintain our accumulate rating on the stock with a price target of Rs.480.

Economic and Political News

- New gas price formula by September end: OilMin

- Petrol price to be cut by Rs.1.89-2.38/litre from August 15

- FCI asked to clear stocks within 18 months of procurement

Corporate News

- Tata Power aims to double generation capacity to 18,000 MW by 2022

- Runwall group to buy Compton Greaves land in Mumbai for Rs.1,01 5cr

- Mahindra Holidays completes acqusition of 19% equity in Holiday Club Resorts