Indian stock market and companies daily report (January 15, 2014, Wednesday)
January 15, 2014, Wednesday, 06:06 GMT | 02:06 EST | 11:36 IST | 14:06 SGT
Indian Markets are expected to open flat with a positive bias tracking a positive opening in the SGX Nifty which is trading lower by ~0.2%. Most of the Asian markets too are trading in the positive territory.
US markets which fell on Monday concerned by weak jobs data for December rose sharply on Tuesday aided by stronger than expected retail sales growth for the month. As per the report released by Commerce Department retail sales rose by 0.2% in December compared to economist estimates for a 0.1% increase. However, the Commerce Department downwardly revised the retail sales growth in November to 0.4% to the originally reported 0.7%. European markets closed in a mixed manner on Tuesday.
Meanwhile the Indian markets snapped two-day winning streak despite the encouraging data on the domestic economic front with retail inflation clocking three-month low in the month of December. The markets were concerned by remarks from Atlanta Federal Reserve President Dennis Lockhart on Monday that the American economy is in strong footing and he would support a continued reduction in stimulus.
The trend deciding level for the day is 21,066 / 6,252 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,122 - 21,21 1 / 6,270 - 6,298 levels. However, if NIFTY trades below 21,066 / 6,252 levels for the first half-an-hour of trade then it may correct 20,976 - 20,920 / 6,224 - 6,206 levels.
Coal India declares special interim dividend of Rs.29/share
Coal India has declared special interim dividend of Rs.29/share which is higher than our as well as street expectations. This is likely to result in one-time cash outflow of Rs.21,560cr (including dividend tax) for the company. Coal India had cash & equivalents of Rs.64,274cr as on September 30, 2013. Over the coming two years, its cash flow from operations and other income is likely to be Rs.24,000cr-Rs.26,000cr while its capex needs are likely to be Rs.4,000-Rs.5,000cr. Hence, we believe this special interim dividend is positive for minority shareholders of the company as surplus cash was diluting ROEs for the company. Moreover, this will result in lower shareholders equity and thus boost ROEs going forward. We believe the stock is likely to react positively in the near-term. However, we expect modest increase in sales volumes growth during FY2014-15 on account of poor offtake capabilities of CIL. Also, we expect CIL's margins to decline during FY2014 due to lower e-auction realizations and higher staff costs/other expenses. Hence, we maintain our Neutral rating on the stock.
We estimate that the government is likely to receive Rs.19,728cr (including dividend tax). The move is positive for government finances as the government stands to garner from receipt of dividend as well as taxes on it. The special dividend is favorable for shoring up of non tax revenues and similar moves by other cash-rich PSUs as well as progress on disinvestment would aid in containing considerable slippage from the fiscal deficit target of 4.8% of GDP.
JLR continues its strong volume performance in December 2013
Tata MotorsRs. (TTMT) global sales continued its disappointing performance (down 20% yoy to 79,220 units) led by the ongoing weakness in the domestic commercial and passenger vehicle segments. While, the global commercial vehicle sales witnessed a significant decline of 43.3% yoy (5.9% mom); global passenger vehicle volumes registered a growth of 6% yoy (down 1.9% mom) driven by Jaguar and Land Rover (JLR), even though domestic segment witnesses a steep decline of 35.3% yoy.
JLR sustained its strong performance registering a better-than-expected growth of 24.7% yoy (0.7% mom) to 40,244 units. The performance continues to be driven by the strong growth in the Jaguar and Land Rover models backed by the success of the new launches and strong growth across the world markets, specifically in China and the US. Jaguar reported a 21.5% yoy growth to 6,613 units driven by the incremental volumes from the F-type and strong growth in the XF model. Land Rover sales too recorded a robust growth of 25.3% yoy to 33,631 units led by continued momentum in Range Rover Evoque and aided further by the ramp-up in dispatches of the new Range Rover and the new Range Rover Sport.
Going ahead, we expect headwinds in the standalone business to continue in FY2014 due to weak macro-economic environment, which is expected to continue impacting the domestic volumes. Nevertheless, we expect JLR to sustain its strong performance driven by continued momentum in the global luxury vehicle market, success of the recently launched models and strong product launch pipeline. We are building in an ~13% volume CAGR for JLR with an EBITDA margin improvement of ~180bp over FY2013-15E, driven by superior product mix and favourable geography mix. We retain our positive view on TTMT and maintain our Accumulate rating on the stock with a SOTP target price of Rs.419.
The Attorney General clears Hindustan Zinc stake sale via auction
Media reports suggest that the Attorney General has cleared the way for government to offload its residual stake in Hindustan Zinc (HZL) through auction. The Government has 29.5% stake in HZL which is a subsidiary of Sesa Sterlite. The stock is likely to react positively as selling government stake is positive for HZL shareholders. It is positive for Sesa Sterlite as the auction of government stake in HZL will make HZL cash fungible for Sesa Sterlite; it can use the cash to repay some of its debt. Until further clarity emerges on this matter, we maintain our estimates and a Buy rating on the HZL with a target price of Rs.156.
Yes Bank - (CMP: Rs.346 / TP: 419 / Upside:-21.0% )
Yes Bank is slated to announce its 3QFY2014 results today. We expect the bank to report a healthy NII growth of 20.8% yoy to Rs.706cr, on back of advances growth of 18% yoy. Non-interest income is also expected to grow healthy by 14.7% yoy to Rs.359cr. Operating expenses are expected to increase by 28.1% yoy to Rs.428cr. Provisioning expenses are expected to rise at Rs.63cr as compared to Rs.57cr reported in 3QFY2013. Hence, we expect the bank to report healthy PAT growth of 15.9% yoy during the quarter to Rs.397cr. At the CMP, the stock is trading at 1.4x FY2015E ABV. We recommend a Buy rating on the stock.
Economic and Political News
- Govt working 'very hard' to reduce coal imports: Mayaram
- Green nod difficult if panchayats oppose: Moily
- Iranian oil imports could be cut by 15% in 2014-15: Oil Min
- Sudan offers ONGC Videsh two oil and gas blocks
- RIL eyes Petronas stake in Venezuela project
- CEA asks Tata, Hindalco others to speed up coal mine output
- NTPC proposes to add Dabhol power plant to Telangana package
- J P Chalasani to join as group CEO of Punj Lloyd