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Reports India

Indian stock market and companies daily report (July 14, 2014, Monday)

July 14, 2014, Monday, 05:14 GMT | 01:14 EST | 09:44 IST | 12:14 SGT
Contributed by Angel Broking

Indian markets are expected to open on a positive note with tracking marginally positive opening on SGX Nifty along with marginal gains in Asian markets.

The US markets managed to end positive showing lack of direction for the whole trading session on Friday as it post $70.5bn June budget surplus. Meanwhile European stocks ended with some modest gain .

Back home, Indian shares fell sharply with Sensex & Nifty closing at 5 week low as the budget lacked clarity on curbing fiscal deficit and issue of retrospective taxes hurt investor sentiments, who had hoped for big bang announcements.

Markets Today

The trend deciding level for the day is 25,184 / 7,511 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 25,389 - 25,754 / 7,575 - 7,690 levels. However, if NIFTY trades below 25,184 / 7,511 levels for the first half-an-hour of trade then it may correct 24,819 - 24,614 / 7,396 - 7,332 levels.

May IIP at 4.7%, highest level since Oct-12

May IIP posted an encouraging 4.7% YoY growth (prior: 3.4% YoY, consensus: 3.6% YoY) indicating recovery in growth prospects for industry. The growth was mainly driven by manufacturing sector growth which came at 4.8% Vs 2.6% in April. 16 out of 22 industries registered positive growth. The jump in May IIP data is slightly surprising considering India's core industry growth for May slowed to 2.3% versus 4.2% month-on-month and 5.9% year-on-year and core sector is 38% in the Index of Industrial Production. Although the April-May prints indicate a turnaround in the prospects for the industrial sector in the economy, we note that they have also benefited from a favourable base effect.

Infosys (CMP: Rs.3,326/ TP: Rs.4,207/Upside: 26.4%)

For 1QFY2015, Infosys The company posted a 2.0% sequential growth in USD revenues to US$ 2,133mn V/s US$2,151 mn expected. On constant currency terms, the revenues grew by 1.5% qoq. In rupee terms, revenues came in at Rs.12,770cr V/s Rs.12,843cr expected , down 0.8% qoq. The key positive surprise in the result was EBIT margin which came in at 25.1% V/s 25.5% in 4QFY2014, a dip of 34bps.This was much higher than the 22.6% expected.On USD, the net profit came in at US$482mn, a qoq dip of 1.0%. On yoy basis in US $ terms, the company posted sales and net profit growth of 7.1% and 15.3% respectively, while in Rs. terms it was 13.3% and 21.6% yoy respectively. We maintain our buy rating on the stock with a target price of Rs.4,207.

Cera Sanitaryware (CMP-Rs.1,272/ TP: -/ Upside: -)

Cera Sanitaryware Ltd. (CSL) reported decent set of numbers for 1QFY2015. Top line surged by 28.2% yoy to Rs.162cr, in-line with our expectation of Rs.168cr. On the operating front, EBITDA grew by 21.4% yoy to Rs.24cr, 7.5% higher than our estimate of Rs.22cr. However, EBITDA margin dip by 84 basis point yoy and came in at 14.9% mainly dent by increased raw material expenses by 163bp yoy as percentage of sales. Subsequently net profit for the company grew by 22.4% yoy to Rs.14cr against our estimate of Rs.13cr, while net profit margin came in at 8.4% from 8.8% in 1QFY2014. Considering the recent run up, the stock is already trading at 21.8x PE for FY2016E and we believe the stock is overvalued at the current level. Since we donRs.t expect any further upside, we are dropping our coverage on the stock.

Economic and Political News

- Sugar output to rise 4% in 2014-15 crushing season despite lower acreage

- 10% Customs duty will impact telecom industry which imports equipment worth $8-10 bn every year

- Govt wants non-discriminatory conduct on retro tax: Prasad

Corporate News

- JSW Steel Q1 output up over 8% at 3.1 MT

- Coal India unit shuts 3 mines in Odisha after protests

- Aegis to use US biz sale money to buy more firms