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Reports India

Indian stock market and companies daily report (March 10, 2014, Monday)

March 10, 2014, Monday, 05:37 GMT | 02:37 EST | 10:07 IST | 12:37 SGT
Contributed by Angel Broking

The Indian Markets are expected to open in red tracking negative opening in SGX Nifty and most of the Asian indices.

Although US markets initially moved higher at the start of Friday's session, they failed to sustain the upward move over the course of the trading day. The choppy trading came despite the release of a relatively upbeat monthly employment report. The report from the Labor Department showed that non-farm payroll employment rose by 175,000 jobs in February compared to economist estimates for an increase of about 150,000 jobs. However, the traders seemed skeptical on whether the data supports any further upside for the markets. Meanwhile, the European markets tumbled on Friday amid fears of conflict between Russia and the West over Ukraine. Further, the European Central Bank's decision to not cut rates also contributed to the weakness in markets.

The Indian markets continued to rally on Friday, driven by sustained inflows from foreign institutional investors as investors bet on a stable government emerging from the April-May general elections. The improvement in domestic macroeconomic environment also gave investors further confidence to offload defensive stocks and lap up cyclical and rate-sensitive stocks.

Markets Today

The trend deciding level for the day is 21,807 / 6,493 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 22,074 - 22,228 / 6,572 - 6,61 7 levels. However, if NIFTY trades below 21,807 / 6,493 levels for the first half-an-hour of trade then it may correct 21,653 - 21,385 / 6,448 - 6,368 levels.

Infotech to acquire US-based Softential for over $17mn

Infotech has announced that its wholly owned subsidiary, Infotech Enterprises America, Inc. has signed a definitive agreement to acquire Softential, Inc. Management indicated that price paid for the acquisition would be — 1.1x of its 2013 revenue (US$17m) plus performance-based earn-out component in the first year. Based on the above information, upfront price paid would be — US$18-20mn and the company expects to finance it with 50% equity and 50% debt.

Softential provides IT service management and service assurance for clients in telecommunication and cable operators. It has —140 FTEs. As per management, this acquisition would enable Infotech to broaden its service portfolio for its existing customers in telecom industry segment. As per management, revenue for Softential has remained largely flat for the last three years and current EBITDA margins are 25%. Management expects to drive revenue to US$30m by 2016E (implies CAGR of 21%) and maintain its EBITDA margins at 25%+. This acquisition is expected to be EPS accretive in FY2016. . The stock is already trading at —13x FY2015e earning, which is higher than average of —10x, we maintain our Neutral rating on the stock.

Bajaj Auto launches new Discover 125

Bajaj Auto has launched the widely anticipated new Discover 125 at an aggressive price of '48,000 (ex-showroom Delhi). The new motorcycle is powered by a 124.6cc 4-valve engine with the twin spark DTS-i technology and generates power of 11.5PS. The company claims that the new motorcycle will deliver a fuel efficiency of 76kmpl. The new Discover 125 will compete against the likes of Honda CB Shine, Hero Glamour and Hero Passion Pro. This is the second new Discover launch (the company earlier launched Discover 100M) by the company in the last six months and success of these two models holds immense significance for the company. The company has been struggling in the less than 125cc category segment due to the disappointing performance of the flagship brand, Discover, whose volumes have declined by —25% yoy in 9MFY2014. As a result, the company's market share in the less than 125cc segment has eroded by ~500bp yoy to ~20%. Nevertheless, we expect Bajaj Auto's domestic volumes to recover going ahead led by full benefits of the recently launched Discover M and Discover 125. Additionally, export volumes continue to improve driven by market share gains in Africa and Latin America and expansion into newer markets. We maintain our Buy rating on the stock with a target price of ?2,250.

Economic and Political News

- Gas price set to be doubled from April 1

- Government to clarify intent of provisions under BIPA

- Auction for 700 MHz spectrum likely soon

- Iron ore exports drop 19% in 11 months

- Review of subsidy plan for off-grid solar applications

Corporate News

- Ranbaxy recalls over 64,000 bottles of generic Lipitor in US

- Apollo Hospitals postpones plans to list in Singapore

- Dishman Pharma to sell land to Nirma to cut debt

- NTPC challenges CERC order on tariff Norms in HC

- SBI sees coal FSAs as stress reliever for power loans