Indian stock market and companies daily report (January 27, 2014, Monday)
January 27, 2014, Monday, 05:21 GMT | 00:21 EST | 10:51 IST | 13:21 SGT
Indian Markets are expected to open in red tracking negative opening in most of the Asian markets amid anxiety over sharp outflows of funds from emerging markets.
US markets moved sharply lower over the course of the trading day on Friday as investors fled equities and emerging-markets currencies on concerns about a contagion effect from China's manufacturing slowdown. The report from Markit and HSBC showed that their index of Chinese manufacturing activity fell to 49.6 in January from 50.5 in December, with a reading below 50 indicating a contraction. A sell-off in emerging-market currencies also weighed on the markets amid concerns about China, political unrest, and U.S. monetary policy. The European markets also finished solidly in negative territory again Friday, adding to the losses of the previous session.
On domestic front, the Indian markets fell sharply on Friday, joining a global market rout, as growing concerns about slowing growth in China and a mixed bag of corporate earnings from the U.S. and Europe eroded investorsRs. appetite for risk. Commodities declined and emerging market currencies came under selling pressure, driving investors to seek safety in safe-haven assets like the yen, gold and highly-rated government bonds.
The trend deciding level for the day is 21,197 / 6,287 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,270 - 21,407 / 6,311 - 6,355 levels. However, if NIFTY trades below 21,197 / 6,287 levels for the first half-an-hour of trade then it may correct 21,060 - 20,987 / 6,243 - 6,220 levels.
United phosphorous (CMP: Rs.204/ TP: Rs.250/ Upside: 22%)
United phosphorous (UPL) declared robust set of numbers. For the quarter 3QFY2014, the company posted sales of Rs.2605cr, registering a yoy growth of 15.5%. The growth was aided by the volume growth of 10% and a price appreciation of 2%, while the rest of the gains were on back of 3.0% rise in the exchange rate. In terms of geographies, the key regions which posted robust growth were Europe and India , which posted gains of 24% and 21% respectively. Latin America, on the other hand posted a growth of 18% yoy growth during the quarter. On the Operating front, the OPM's came in at 16.2% V/s 16.1% during the last corresponding period. However, inspite of lower expansion in the OPM, lower rise in the interest expenses, during the quarter, lead to the PBT growing by the 28.0% yoy. This along with a lower taxation during the quarter led the company to post almost 47.1% rise in the Adj. net profit during the quarter. We maintain our buy on the stock with a price target of Rs.250.
Persistent Systems (CMP: Rs.1,006/ TP: Under review)
Persistent Systems reported its 3QFY2014 results which came in better than our expectations largely on all fronts. The dollar revenues came in at US$70mn, up 2.2% qoq, led by healthy 3.8% qoq growth in IT services revenues. IP-led revenues declined by 4.8% qoq after a sharp rise of 37.4% in 2QFY2014. In INR terms, revenues came in at Rs.433cr, almost flat qoq. The company's EBITDA margin grew substantially by ~170bp qoq to 27.7%, on the back of ~11% qoq decline in SG&A expenses. PAT stood at Rs.64cr, up 5.6%% qoq, negatively impacted by forex loss of Rs.15cr as against gain of Rs.10cr in 2QFY2014. The management remains confident of FY2015 with deal pipeline being strong and remains focused on increasing the share of IP-led revenues in its portfolio. Owing to recent sharp run up in the stock price, we currently maintain Neutral rating on the stock. We would revise our target price and rating post the earnings conference call.
MLIFE (CMP: Rs.389/ TP: Rs.478/ Upside: 23%)
For 3QFY2014, Mahindra Lifespace Developers (MLIFE) reported mixed set of numbers which were in line with the consensus estimates on the profitability front. MLIFE's standalone revenue reported a decline of 6.3% yoy to Rs.58cr in 3QFY2014; which was lower than consensus estimate of Rs.93cr. Standalone EBITDA decreased by 75% yoy to Rs.2cr, owing to lower-than-expected revenue recognition and increase in staff cost (up 17% yoy) during the quarter. On earnings front, the company reported PAT of Rs.17cr (consensus estimate was Rs16.4cr); indicating a growth of 22.9% yoy. This was mainly on account of (a) higher other income and (b) reassessment of effective tax rate during the quarter. On a consolidated level, MLIFE reported a revenue of Rs143.7cr and PAT of Rs29.3cr, suggesting a profit for its subsidiaries at net level. During the quarter, the company has launch three projects- (a) New residential project Nova at MWC, Chennai, (b) Phase IV Ashvita, Hyderabad and (c) Phase IIC at Bloomdale, Nagpur. The company has also signed three new customers at Mahindra World City. We continue to maintain Buy rating on the stock with a target price of Rs.478.
Hindustan Unilever (CMP: Rs.566/ TP: -/ Upside: -)
Hindustan Unilever is scheduled to declare its 3QFY2014 results today. We expect the top-line to grow by 7.8% yoy to Rs.6,938cr. Volume growth is expected to be ~4%. OPM is expected to increase by 76bp yoy 14.3%. Bottom-line is expected to increase by 5.2% yoy to Rs.924cr. We maintain our Neutral recommendation on the stock.
Idea Cellular (CMP: Rs.153/ TP: -/ Upside: -)
Idea Cellular is slated to announce its 3QFY2014 results today. We expect the company to record revenue of Rs.6,582cr, up 4% qoq. This is expected primarily on the back of 1.0% qoq rise in ARPM to Rs.0.44/min and 3% qoq rise in MOU to 450min. EBITDA margin of the company is expected to inch up slightly by ~10bp qoq to 31.3%. PAT is expected at Rs.463cr. We maintain Neutral rating on the stock.
Shree Cement (CMP: Rs.4,398/ TP: -/ Upside: -)
Shree Cement is expected to declare its 2QFY2014 results today. We expect the top-line to decline by 3.5% yoy to Rs.1,378cr. The OPM is expected to decline by 70bp yoy to 25.2%. Bottom-line is expected to decline by 10.3% yoy to Rs.204cr. We maintain our Neutral recommendation on the stock.
Allahabad Bank (CMP: Rs.87/ TP: -/ Upside: -)
Allahabad Bank is scheduled to announce its 3QFY2014 results today. We expect the bank to report flattish Net Interest Income while Non-interest income is expected to grow moderate by 4.4% yoy to Rs.356cr. Operating expenses are expected to increase by 7.8% yoy to Rs.874cr. Provisioning expenses are expected to increase by 15.4% yoy to Rs.499cr. Hence Net profit is expected to de-grow by 23.6% yoy to Rs.237cr. At the CMP, the stock is trading at 0.5x FY2015E ABV. We maintain our Neutral recommendation on the stock.
Economic and Political News
- Finance Ministry sure of achieving 4.8% fiscal deficit target
- Government may give Rs.2,000/t subsidy on raw sugar export
- India's growth decline mainly due to domestic factors: Montek
- Telecom Commission recommends 3 spectrum fee options to ministerial group
- BPCL plans Rs.1 3,000cr refinery expansion
- Goldman Sachs may buy 26% of Opto Circuits
- GMR Infra gets board approval to raise Rs.2,500cr
- Senior level executive PVV Srinivasa Rao quits Bharti Airtel
- Tata MotorsRs. MD Karl Slym passes away in a freal accident