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Indian stock market and companies daily report (February 21, 2013, Thursday)

Contributed by Angel Broking

The Indian market is expected to open on a negative note tracking SGX Nifty and major Asian markets which are trading lower, after minutes of the Federal Reserve meeting showed that US policy makers are divided over further stimulus measures.

The US market ended on a negative note on Wednesday partly due to profit booking. A negative reaction to the minutes of the latest Federal Reserve meeting also generated selling pressure. In addition, a larger-than-expected decline in US housing starts, which fell 8.5% to a seasonally adjusted annual rate of 890,000 in January 201 3 from the revised December 201 2 estimate of 973,000, impacted the market. The European markets ended WednesdayRs.s trading session with mixed results, following yesterdayRs.s strong rally mainly due to the negative housing start data released in the US.

Back home in India, the shares rose marginally on Wednesday, with the Reliance Industries stock rallying after company expressed plans to invest over US$5bn in the next three to five years jointly with British Petroleum to increase output from the KG-D6 block. Going ahead, market participants would keep an eye on the proceedings in the Budget session which commences today. On the economic front, reports on US weekly jobless claims, US consumer price inflation and US existing home sales would also be keenly watched.

Markets Today

The trend deciding level for the day is 19,668 / 5,951 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,717 - 19,791 / 5,964 - 5,984 levels. However, if NIFTY trades below 19,668 / 5,951 levels for the first half-an-hour of trade then it may correct up to 19,594 - 19,546 / 5,930 - 5,917 levels.

Budget Session of Parliament commences

The three-month long Budget Session of Parliament commences today, with the President addressing the joint session of parliament. It is expected to conclude on May 10, 2013. The two Houses will adjourn for recess on March 22, 2013, to reassemble on April 22, 2013 to enable the Department-related Parliamentary Standing Committees to examine the Demands for Grants relating to various Ministries/Departments and make their reports to the Houses. The Session will provide 34 sittings - 21 sittings during first part of the Session before recess and 13 sittings during second part of the Session. The main legislative agenda for the business includes financial business relating to Railway and General Budgets for 2013-14.

The Railway budget for FY2014 will be presented to the Lok Sabha on February 26, 2013. Following this, the Economic Survey of India will be tabled in the Parliament on February 27, 2013. The Budget (General) for FY2014 will be presented at February 28, 2013.

Other than the financial business to be conducted by the House, there is a heavy non financial legislative agenda lined up with 55 bills and 3 other non legislative items. The key bills for consideration and passing include the Land Acquisition, Rehabilitation and Resettlement Bill, 2011, the Companies Bill, 2012 as passed by Lok Sabha, National Food Security Bill, 2011, the National Highway Authority of India (Amendment) Bill, 2012 as passed by Lok Sabha, the National Highway Authority of India (Amendment) Bill, 2012 as passed by Lok Sabha, Pension Fund Regulator and Development Authority Bill, 2011. The Finance Bill, 2013, the Securities and Exchange of Board of India (Amendment) Bill, 2013 are amongst the bills for introduction, consideration and passing in the Parliament.

4QCY2012 Result Review

Nestle (CMP: Rs.4,594/ TP: / Upside: -)

For 4QCY2012 Nestle posted a 10.1% yoy growth in top-line to Rs.2,153cr. Domestic sales increased by 9.6% yoy to Rs.2,041cr on account of better realizations and superior product mix. Exports rose by 20.6% yoy aided by higher exports to third parties, which rose by 47.2% on a yoy basis. OPM stood at 22.3%, up 122bp on a yoy basis. Bottom-line rose by 20.8% yoy to Rs.279cr. We maintain our Neutral recommendation on the stock.

Abbott India (CMP: Rs.1,367/ TP: Rs.1,634/ Upside: 20%)

For 4QCY2012, Abbott India (AIL) reported a better than expected performance. Its top-line grew by 12.3% yoy from Rs.399cr in 4QCY201 1 to Rs.448cr in 4QCY2012, 5.6% higher than our estimate of Rs.424cr. For the full year CY2012, AIL witnessed a 14.3% yoy revenue growth to Rs.1,653cr. EBITDA margin expanded by 241bp yoy to 16.3% in 4QFY2012 from 1 3.8% in 4QCY2011 due to decrease in employee cost and other expenses during the quarter. This led to a net profit growth of 35% yoy to Rs.50cr in 4QCY2012 from Rs.37cr in 4QCY2011. Fall in other expenses during CY2012 led to EBITDA margin expansion during CY2012 by 226bp to 12.2% from 10% in CY201 1, thus leading to a 20% yoy growth in net profit for CY2012 to Rs.145cr. With recent fall in stock price and incorporation of CY2014 numbers, we upgrade the stock to Buy with a target price of Rs.1,634 based on a target PE of 18x for CY2014E.

4QCY2012 Result Preview

ABB (CMP: Rs.611/ TP: Rs.573/ Downside: 6%)

For 4QCY2012, we expect ABB India (ABB) to post a top-line growth of 4.9% yoy to Rs.2,307cr. ABBRs.s margin is expected to remain under pressure, coming in at 5.6%, due to low margin orders of power systems and the process automation segment. Consequently, ABBRs.s bottom-line is expected to be flat yoy at Rs.63cr. On account of high valuations, we recommend Reduce on the stock with a target price of ?573.

Economic and Political News

- FDI inflows dip 19% in December 2012 to US$1.1 bn

- Commerce Ministry seeks suspension of gold jewellery import from Thailand

- Department of TelecomRs.s auction of 900MHz is confiscatory: Vodafone

- CCI probes cartelization in asbestos cement sheets market

Corporate News

- ONGC in talks to buy VideoconRs.s stake in Mozambique gas field

- Maruti Suzuki, Hero MotoCorp declare holiday following strike calls

- NTPCRs.s 1,980 MW Jharkhand plants win cabinet approval

- HUDCO to raise up to Rs.2,805cr through tax-free bonds

- Daimler India rolls out new range of BharatBenz trucks

- Escorts inks partnership for Ferrari tractors