New York: 21:20 || London: 02:20 || Mumbai: 05:50 || Singapore: 08:20

Reports India

Indian stock market and companies daily report (February 28, 2014, Friday)

February 28, 2014, Friday, 05:16 GMT | 00:16 EST | 09:46 IST | 12:16 SGT
Contributed by Angel Broking

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 stocks moved mostly higher over the course of the trading day on Thursday despite subdued buying interest. The strength on Wall Street came in as traders digested Federal Reserve Chair Janet Yellen's testimony before the Senate Banking Committee that the Fed will consider the issue at its March meeting. On the economic front, the Commerce Department released a report before the start of trading showing a drop of 1% in durable goods orders in the month of January. European markets ended mixed on Thursday, with German stocks down for a third day amid rising tensions in Ukraine.

Meanwhile, Indian shares extended its gains on Thursday owing to sustained buying by foreign funds and short covering amid the expiry of monthly derivative contracts lifted the key benchmark indexes to one-month highs.

Markets Today

The trend deciding level for the day is 20,951 / 6,229 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,041 - 21,096 / 6,256 - 6,273 levels. However, if NIFTY trades below 20,951 / 6,229 levels for the first half-an-hour of trade then it may correct 20,896 - 20,806 / 6,212 - 6,185 levels.

BHEL wins order worth Rs.321cr

BHEL has secured a contract worth Rs.321cr for setting up 206MW Hydro Electric Project in the state of Punjab. The bids were invited by Punjab State Power Corporation Limited (PSPCL) through a Global E-tendering process, among which BHEL's offer was found techno-economically the best. The project comprises seven hydro generating sets located in two Power Houses: Power House-I (3x33 MW) and Power House-II (3x33 MW + 1x8 MW). BHEL's scope of work in the contract envisages design, manufacture, supply, installation and commissioning of hydro generating sets and associated electro mechanical works. We maintain Neutral rating on BHEL.

Dr Reddy's launched Sumartriptan Injection in US

Dr. Reddy's Laboratories announced it has launched Sumatriptan Injection USP, Autoinjector System 6 mg/0.5 mL for Subcutaneous use, a therapeutic equivalent generic version of IMITREX STATdose Pen (sumatriptan succinate) 6 mg/0.5 mL in the US market, following the approval by the United States Food & Drug Administration (USFDA).The IMITREX STATdose Pen (sumatriptan succinate) brand and generic combined had US sales of approximately US$169mn MAT, for the most recent twelve months ending in December 2013 according to IMS Health. Dr. Reddy's Sumatriptan Injection USP, Autoinjector System 6 mg/ 0.5 mL is available in a carton containing 2 single-dose prefilled syringes. The product, is already competitive, with lots of generic players, and thus expected to gross sales of US$8-10mn. We maintain our Accumulate rating with a target price of Rs.3008.

Result Review

Goodyear India (CMP: Rs.379, TP: Rs.487, Upside: 28%)

For 4QCY2013, Goodyear reported a top-line of Rs.406cr marginally below than our expectations, 5.7% higher on a yoy basis from Rs.384cr in 4QCY2012 mainly due to ~20% yoy growth in domestic sales of tractors during the quarter. The EBITDA came in at Rs.39cr as against expectation of Rs.38cr. The EBITDA margin expanded by 343bp yoy from 6.2% in 4QCY2012 to 9.6% in 4QCY2013, against our estimate of 9.1%. This expansion in margin was mainly led by a 357bp yoy decline in raw material cost as a percentage of net sales. The increase of 129bp yoy in employee cost as a percentage of sales was set off by a 115bp yoy decline in other expenses. Consequently, net profit grew by 71.3% yoy to Rs.28cr in 4QCY2013, 14% higher than our estimate due to higher than expected other income.

During CY2013, the top line grew by 5.8% yoy to Rs.1572cr driven by ~17% yoy growth in tractor volumes which was led by good monsoon during the year. The EBITDA margin improved by 272bp yoy to 8.9% due to declining rubber prices. Consequently, the net profit rose by 67% yoy to Rs.94cr.

Though a slowdown in overall auto industry is expected to keep revenue growth restrained, we believe lower international rubber prices would help in maintaining margins going forward. At the current market price, the stock is trading at a PE of 7.8x for CY2015E and P/B of 1.5x for CY2014E. We recommend Buy rating on the stock with a target price of Rs.487, based on a target P/E of 9.0x for CY201 5E.

ITD Cementation (CMP: Rs.130/ TP: Rs.150/ Upside: 16%)

For 4QCY2013, ITD Cementation reported disappointing set of number on all fronts. The revenue of the company for the quarter dipped by 1 5.0% on yoy basis to Rs.266cr, 20.6% lower than our estimate of Rs.336cr. On account of lower raw material cost, company's operating margin expanded by 95bp yoy to 11.4%, against our expectation of 9.9%. Interest outgo stood at Rs.32cr. The company reported another income of Rs.10.1cr leading to a profit of Rs.2cr, 4.4% lower than our estimate of a profit of Rs.3cr.

We believe the major reason for disappointing numbers is delay in project execution. However, the company has a strong order book of Rs.3,480 executable over a period of two and a half years. The stock is currently trading at a PBV of 0.3x. Amidst the gloomy situation, we reiterate our Buy recommendation on the stock with a revised target price of Rs.150 based on the revised target PBV of 0.4x for CY2014E. We may revise our numbers post management interaction.

Economic and Political News

- Coal imports to rise just 3.4% in FY1 4

- Cabinet may approve Rs.1,000/month minimum pension tomorrow

- Ministry requests FinMin to withdraw 5% export duty on pellets

Corporate News

- Jyothy steps up focus on Henkel brands

- eBay leads Rs.830cr Snapdeal investment

- EGoM to decide on IOC share sale price tomorrow