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Reports India

Indian stock market and companies daily report (July 25, 2014, Friday)

July 25, 2014, Friday, 03:13 GMT | 23:13 EST | 06:43 IST | 09:13 SGT
Contributed by Angel Broking

Indian markets expected to open on flat note tracking SGX Nifty and mixed global cues.

US markets ended flat even though the jobless claims fell to eight year low. The markets were choppy due to bigger drop in new home sales.

European markets continued the rally due to better PMI data and also lower concern of sanction on Russia.

Back home, Indian markets ended positive at an all-time high on expectation of major reforms and also better ChinaRs.s PMI data. Meanwhile, the government has approved 49% FDI in insurance and will take structural reforms in the coming months.

Markets Today

The trend deciding level for the day is 26,21 4 / 7,81 3 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 26,350 - 26,429 / 7,854 - 7,877 levels. However, if NIFTY trades below 26,214 / 7,813 levels for the first half-an-hour of trade then it may correct 26,135 - 25,999 / 7,790 - 7,749 levels.

IPCA Labs voluntary stops shipments of API for US from its Ratlam (Madhya Pradesh) facility

During the recent USFDA inspection at the CompanyRs.s Active Pharmaceutical Ingredients, (APls) manufacturing facility situated at Ratlam (Madhya Pradesh) the Company has received certain inspection observations in Form483 from the USFDA. Consequent to this, the company has voluntarily decided to temporarily suspend API shipments from this manufacturing facility for the US markets till this issue is addressed. This voluntarily stoppage of API shipments from the Ratlam manufacturing facility will also have impact on the CompanyRs.s formulations export business to the US market since the companyRs.s formulations manufacturing units situated at Piparia (Silvassa) and SEZ, Indore (Pithampur) use the APls manufactured from the CompanyRs.s Ratlam manufacturing facility for manufacturing formulations for the US market. The Company has committed in resolving this issue at the earliest.

While Form 483, does not imply a withdrawal from the market, but since company has voluntary withdrawn the products, the same could impact a part of its API and formulation business in US. US as on FY201 4, contributed sales of Rs.41 9.6cr (1 2% of total sales and 20% of exports). Of this Formulation: API mix is around 61:39.thus on a worst case scenario, the companyRs.s sales Further, the company has another API facility at Baroda, which is USFDA approved. Thus net impact on the company would depend on the time company takes to come out of the same or shift its business to other USFDA approved facility. Thus, we expect the FY201 5 sales to be impacted, while FY2016 should remain impact, thus we maintain our FY201 6 numbers. As of now we have reduced our sales and net profit by 4.0% for FY2015, while maintain our FY2016 numbers. We maintain our buy on the stock with a price target of 1046.

Result Review

Wipro (CMP: Rs.577/ TP: Rs.715/ Upside: 23.9%)

Wipro announced its 1QFY2015 results, better than expected. The companyRs.s IT services segment posted revenues of US$1,740.2mn V/s US$1,730.6mn expected, up 1.2% qoq, with IT services operating margins (EBIT) at 22.8%. At the consolidated level, we expect the company to record revenues of Rs.11,245cr V/s Rs. 11,220cr expected, down 3.9% qoq. At a consolidated level, Wipro posted EBIT margins of 21.1% V/s 21.2% expected a 95bps dip qoq. Thus, PAT came in at Rs. 2,1 03.2cr V/s Rs. 2,049.1 cr expected, down by 5.5% qoq.

The IT Services segment of the company had 147,452 employees as of June 30, 2014 and added 35 new customers for the quarter. For 2QFY201 5, the company has guided for a IT services, revenue to grow to US$ 1,770-1,81 0mn (at USD/INR of 59.66), which implies a qoq growth of 1.7-4.0.We maintain our buy on the stock with a target price of 715.

Economic and Political News

- Govt may soon decide on FDI in Rail, Defence sectors

- Power projects worth 36,000cr stranded on coal shortages

- FIPB cl ears 19 FDI proposals including Walt Disney Company, Reckitt Benckiser

Corporate News

- Mahindra Holidays & Resorts acquires Covington Sarl

- Ranbaxy inks pact with Cipher to sell acne drug in Brazil

- Ca irn to shut down Mangala terminal for 1 0 days