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Indian stock market and companies daily report (February 26, 2014, Wednesday)
Indian markets are expected to open flat today following flat opening to SGX Nifty. Meanwhile, most of the Asian indices are trading mixed amid concerns of slowdown in China.
US markets showed lack of direction throughout much of the trading day on Tuesday before ending the session modestly lower. The lackluster performance seen for most of the session came as traders seemed reluctant to make any significant moves ahead of the release of some key economic data later in the week, including reports on new home sales and durable goods orders. The markets largely shrugged off a report released by the Conference Board showing that US consumer confidence (index fell to 78.1 from 79.4 in January) has deteriorated by more than expected in February. Additionally, according to an S&P report home prices in major US metropolitan areas rose by more than expected in the month of December.
Meanwhile, Indian shares extended its gains on Tuesday despite mixed global cues. Trading, however, remained little bit volatile ahead of the expiry of February series derivative contracts on Wednesday. Looking ahead, market participants would be watchful of the US Commerce Department's report on new home sales which is scheduled for release today.
The trend deciding level for the day is 20,848 / 6,198 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 20,917 - 20,982 / 6,219 - 6,238 levels. However, if NIFTY trades below 20,848 / 6,198 levels for the first half-an-hour of trade then it may correct 20,783 - 20,713 / 6,179 - 6,158 levels.
Ranbaxy Labs suspends production of all API's from Tonsa and Dewas plant
Ranbaxy Laboratories, has announced that it has temporarily suspended shipments of active pharmaceutical ingredients (APIs) produced at its Toansa and Dewas plants in India. Ranbaxy announced on January 24Rs.2014 that API shipments from the Toansa plant to the United States were suspended. Additionally, Ranbaxy has now voluntarily suspended all API shipments from both the Toansa and Dewas plants in order to allow for further evaluation and inspection of manufacturing processes and quality control systems. The temporarily suspended shipments will be resumed once the processes and controls at these facilities are reconfirmed based on internal evaluations and inspections. Since, company has voluntarily withdrawn its production; we believe that the company would have made alternative arrangements for the production of the withdrawn of the API's. We remain neutral on the stock.
IFB Agro's board approves to sell its IMFL brands to Tilaknagar Industries
As per BSE announcement, the board of directors of IFB Agro has approved the proposal to sell its Indian Made Foreign Liquor (IMFL) leading brands to Tilaknagar Industries Ltd. This deal includes selling of vodka brand, Volga and gin brand, Blue Lagoon. These two brands are popular in Assam, West Bengal and Odisha. IFB has plans to get its own brands manufactured from outsourced vendors. As a part of this strategy, it has already exited the third party bottling business and now it is in process of selling its leading IMFL brands. The deal size is still unknown and we await further clarification on the same. We maintain our Buy rating on the stock with a target price of Rs.249 based on a target PE of 6x for FY2015E.
Sanofi India (CMP:Rs.2640 / TP: / Upside:)
Sanofi India, posted numbers better than expected. Total sales came in at Rs.461cr V/s Rs.440cr expected a growth of 15.0%. The main surprise came in at operating front. The OPM's came in at 18.8% (12.5% expected) an expansion of 615bps yoy, mainly on back of the low rise in the employee and other expenses, which rose by 2.6% and 4.0% respectively. Also a 241bps yoy expansion in the GPM, also aided the OPM expansion. This aided the net profit front, to come in at Rs.67.3cr V/s Rs.46cr expected. We remain neutral on the stock.
Vesuvius India (CMP: Rs.487/ TP: -/ Upside: -)
For 4QCY2012, VIL reported disappointing set of numbers. Topline came flat at Rs.155cr, in-line with our expectation of Rs.154cr. The EBITDA margin contracted by 398bp yoy to 15.3% for the quarter from 19.3% in 4QCY2012 majorly due to 216bp yoy increase in raw material cost as a percentage of sales. The employee cost and other expenses also rose by 108bp and 75bp, respectively on yoy basis. Consequently, the net profit for the quarter declined by 23% yoy from Rs.18cr to Rs.14cr in 4QCY2013.
For the full year CY2013, revenue grew by a 6.7% yoy to Rs.602cr. The EBITDA margin improved by 122bp due to margin improvement in 1HCY2013. Consequently, the net profit grew by 16.9% yoy to Rs.65cr in CY2013. The board has recommended payment of Rs.4.75 per share for the year CY2013 and a special interim dividend of Rs.1 per share. Considering the increase in stock price in past 3 months (21%), we remain neutral on the stock.
Economic and Political News
- CERC's brave steps mean well for the power sector
- Zyfin says Indian economy grew 5.5% in Q3
- Maha earmarks outlay of Rs.8,215cr for irrigation in interim budget
- Hyd airport's user development fee scraped: AERA
- Reliance IndustriesRs. JanRs.14 oil imports down 14.2% compared to DecRs.13
- Environment nod for NTPC's Rs.15,000cr North Karanpura project
- IOC to buy 10% stake in PetronasRs. LNG project for US$900mn
- Wipro bags 10 year integrated IT BPO contract from UK based, Carillion
- Oil India board approves Indian Oil stake purchase
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