Indian stock market and companies daily report (January 21, 2014, Tuesday)
January 21, 2014, Tuesday, 05:29 GMT | 00:29 EST | 10:59 IST | 13:29 SGT
Indian Markets are expected to open in the green tracking SGX Nifty which is trading higher. Most of the Asian markets too are trading in the positive territory.
US markets fluctuated over the course of the trading day on Friday before ending the session mostly lower. A mixed batch of earnings and economic news contributed to a lackluster performance by the markets for much of the session. The European markets fell slightly on Monday as investors paused for breath after a two-week rally amid some mixed data out of China and disappointing results from German lender Deutsche Bank.
On the domestic front, the Indian markets rose notably on Monday after the Reserve Bank of India announced its decision to ease the liquidity conditions via repurchase of government securities worth Rs.10,000cr and BJP's prime ministerial candidate Narendra Modi unveiled his economic vision for India at a party national council meet in the Capital.
The trend deciding level for the day is 21,143 / 6,285 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,284 - 21,363 / 6,326 - 6,349 levels. However, if NIFTY trades below 21,143 / 6,285 levels for the first half-an-hour of trade then it may correct 21,064 - 20,922 / 6,262 - 6,221 levels.
CCEA approves HZL stake sale
The Cabinet Committee has approved stake sale in Hindustan Zinc (HZL) where government holds 29.5% stake sale. The government is likely to raise over Rs.17,000cr via stake sale in HZL. The news is positive for HZL stock. Also, the stake sale is positive for HZL's parent company Sesa Sterlite which holds 65% stake in HZL. The stake sale in HZL will make HZL's cash fungible for its parent whose balance sheet is highly leveraged. Post the stake sale by government, Sesa Sterlite can use HZL's cash to repay some of its debt. However, we await further regulatory approvals. We maintain our Neutral rating on Sesa Sterlite and our Buy rating on HZL with a target price of Rs.154.
IVRCL has bagged various orders worth ~Rs.550cr
IVRCL's power division has bagged order worth ~Rs.394cr for supply of equipment and materials for rural electrification and associated 33kV works and erection, testing and commissioning of all equipment and materials for rural electrification and associated 33kV works in 3766 nos. of un-electrified habitations from Madhyanchal Vidyut Vitran Nigam Ltd., Lucknow on turnkey basis. The Building Division has bagged order from Airports Authority of India for construction of new international arrival block, internal modification of existing international passengers terminal building and associated works at Calicut International Airport, with a completion period of 20 months worth ~Rs.84cr. The Company's transportation division has secured an order for ~Rs.72cr from Western Railway, Mumbai. We maintain our Neutral rating on the stock.
Ultratech (CMP: Rs.1,720/TP:-/Upside :-)
For 3QFY2014 Ultratech Cement's (Ultratech) top-line fell by 1.5% yoy to Rs.4,786cr on account of flat performance on the volumes front and a decline in cement realizations due to subdued demand. The company's domestic cement and clinker sales remained flat at 9.7mn tonnes. The sale volumes of white cement and wall care putty rose by 10.3% yoy to 0.29mn tonnes. Blended realizations fell by 1.7% yoy to Rs.4,791/tonne. OPM fell by 497bp yoy to 16.5% on account of lower realizations and increase in operating costs such as raw material, power and fuel and freight costs. Bottom-line fell by 38% yoy to Rs.370cr and was in-line with estimates. We maintain a neutral rating on the stock.
Asian Paints (CMP: Rs.490/TP:-/Upside :-)
For 3QFY2014 Asian Paints posted a 12.4% yoy growth in consolidated topline to Rs.3,41 3cr. The volume growth for domestic decorative business is expected to have decelerated to ~7-8% during the quarter, from ~12-% for 1HFY2014. Industrial paints and automotive coatings continue to be impacted by slow-down in the economy. The company's Middle East and Asia businesses continued to perform well. OPM fell by 170bp on a yoy basis to 14.6% on account of higher raw material costs and other expenses. Bottom-line fell by 1.8% yoy to Rs.329cr and was below estimates. We maintain a neutral rating on the stock.
Colgate Palmolive (CMP: Rs.1,325/TP:-/Upside :-)
Colgate Palmolive is expected to declare its 3QFY2014 results today. We expect the top-line to grow by 14.3% yoy to Rs.872cr. OPM is expected to decline by 99bp yoy to 15.9% impacted by higher raw material costs and other expenses. Bottom-line is expected to increase by 4.4% yoy to Rs.116cr. We maintain our Neutral recommendation on the stock.
Thermax (CMP: Rs.675/ TP: /Upside :)
For 3QFY2014, we expect Thermax to report a 7.8% yoy decline in its top-line to Rs.965cr, as subdued order backlog in the last few quarters (due to weak order inflow) continues to drag down its revenue. The company's EBITDA margin is likely to contract by 97bp yoy to 9.7%. Falling revenue and margin are expected to result in a 23.4% yoy fall of in profit to Rs.58cr. We maintain our Neutral rating on the stock.
Ashok Leyland (CMP: Rs.17/ TP: -/ Upside: -)
Ashok Leyland (AL) is slated to announce its 3QFY2014 results today. We expect Ashok Leyland to continue to report bottom-line loss during the quarter led by considerable drop in volumes, leading to lower utilization levels, and operating margin pressures. We expect the company to register a bottom-line loss of Rs.151cr due to a sharp ~19% yoy (~25% qoq) decline in the top-line to Rs.1,953cr. The topline decline follows a ~19% yoy drop in volumes led by weak macro-economic conditions. We expect EBITDA margins to contract 323bp yoy (114bp qoq) to 1.1%, largely due to poor operating leverage, higher levels of discounting and adverse product-mix. Currently, we have a Neutral rating on the stock.
Economic and Political News
- Maharashtra govt cuts power tariff by 15-20% for all except Mumbai
- Amritsar-Kolkata industrial corridor receives green signal
- Cement demand may grow by 5-6% in FY15
- Subex wins 5 deals worth US$ 10mn
- Sterlite to take up Rs.2,500cr expansion plan in Tamil Nadu
- RIL to beg in CBM gas production in 2015-16