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Reports India

Indian stock market and companies daily report (March 14, 2014, Friday)

March 14, 2014, Friday, 05:09 GMT | 02:09 EST | 10:39 IST | 13:09 SGT
Contributed by Angel Broking

The Indian Markets are expected to open in the red, tracking weak opening in SGX Nifty which is trading lower by ~0.6%. Most of the Asian markets too are trading in the negative territory.

US markets ended lower on Thursday impacted due to geo-political tensions with news reports indicating that Russia military forces are conducting operations in several regions near the Ukrainian border. Further, concerns about Chinese economic growth too added to the selling pressure. The markets rose in the early trade following the release of a report from the Commerce Department showing stronger than expected retail sales growth in February, but fell due to the overseas concerns arising out of Russia and China. The Labor Department also released a report showing an unexpected decrease in initial jobless claims in the week ended March 8th. European markets too declined on Thursday impacted by weak economic outlook for China.

Indian markets too ended lower after a volatile trading session on Thursday, with IT sector leading the downside after Infosys said it expects muted growth in 4QFY201 4 and FY2015 because of weak spending by top clients.

Markets Today

The trend deciding level for the day is 21,829 / 6,510 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,937 - 22,100 / 6,544 - 6,595 levels. However, if NIFTY trades below 21,829 / 6,510 levels for the first half-an-hour of trade then it may correct 21,666 - 21,557 / 6,459 - 6,426 levels.

L&T Construction wins Rs.3,655cr order in Qatar

L&T Construction has received a Rs.3,655cr order (2.187bn Qatari Riyal) from Ashghal, the public works authority of Quatar for design and construction of Al Wakrah Bypass Road. The work involves construction of 11 km road consisting of 10 lanes and four future lane sections with additional collectors/distributor roads, frontage roads and ramps. The freeway will provide access to the existing and planned developments via five major interchanges, comprising 20 bridges, besides 13 bicycle overpasses, eight vehicular underpasses, three pedestrian bridges and 736m and 32m wide vehicular tunnel. The scope of project includes utility works for potable water, treated sewer effluent, drainage, electrical, intelligent transportation system, irrigation and landscaping. The project is scheduled to be completed in 32 months. The order is company's largest road order in international business. We continue to maintain Accumulate on the stock with a target price of Rs.1,320.

TTMT global sales disappoints in FebRs.14, JLR registers healthy growth

Tata Motors (TTMT) global sales continued its poor run witnessing a decline of 19.1% yoy (flat mom) to 79,996 units led by the ongoing weakness in the domestic commercial vehicle segment. The global commercial vehicle volumes posted a significant decline of 44% yoy; however, global passenger vehicle sales grew by 8.8% yoy led by continued momentum in Jaguar and Land Rover (JLR) sales and also due slight uptick in the domestic passenger cars segment.

JLR volumes registered a healthy growth of 9.9% yoy (1% mom) to 39,011, which was slightly lower than our expectations of 40,100 units. This was primarily on account of the lower-than-expected Land Rover performance. While, Jaguar volumes declined 6.6% yoy to 6,634 units, Land Rover volumes registered a growth of 14.1% yoy to 32,377 units.

Going ahead, we expect headwinds in the standalone business to continue in FY2014 due to weak macro-economic environment, which is expected to continue impacting the domestic volumes. Nevertheless, we expect JLR to record a strong performance driven by continued momentum in the global luxury vehicle market, success of the recently launched models and strong product launch pipeline. We retain our positive view on TTMT and maintain our Buy rating on the stock with a SOTP target price of Rs.451.

USFDA issues import alert on Sun Pharmaceuticals Karkhadi plant

The US Food and Drug Administration (FDA), issued an import alert to Sun Pharmaceuticals for all products manufactured at its Karkhadi unit. The company manufactures API and formulations at its Karkhadi unit. The news will not have major impact financially, as the plants contribution to the overall sales is not significant. As a fact, as on MarchRs.2013, the company had 12 USFDA facilities, with around 6 in US, 3 in India and one in Canada, Israel and Hungry respectively. Thus, the company has well diversified manufacturing infrastructure to cater to the US markets, which contribute around 54% of its sales (FY2013). Also, its subsidiaries of the likes of Taro, Caraco and the recent acquisitions, contribute a major chunk of the sales and its growth. Moreover, the company has successfully resolved the issues successfully in the past, as with respect to Caraco. The company said it is fully committed to compliance and has already initiated several corrective steps to address the observations made by the USFDA and has maintained its FY2013-14 consolidated sales growth guidance. Thus we maintain our numbers and neutral rating on the stock, owing to the valuations.

Dr Reddys recalls some batches of the Lansoprazole in US

Indian generic drugmaker Dr Reddys Laboratories has recalled about 58,656 bottles of the heartburn drug lansoprazole in the United States due to a microbial contamination. The recall which was voluntary was classified as a "Class II" recall which indicates a remote chance of severe adverse consequences or death due to the product flaw. Since it's voluntary and small in number, we do not expect major impact on the financials. We maintain our accumulate on the stock with a price target of Rs.3008.

Gujarat Gas to set up CGD in Bhavnagar

PNGRB has granted permission to Gujarat Gas to set up city gas distribution business in Bhavnagar. The company has been granted authorisation to lay, build, operate and expand city gas distribution in Bhavnagar and few talukas of Botad district. This is positive for Gujarat Gas over the long term. However, we await clarity from the Management regarding the timelines, capex etc. Until then, we maintain our Neutral rating on the stock.

Result Review

Mphasis 1QFY2014 (CMP: Rs.394/ TP: Under review/ Upside: -)

Mphasis announced its 1QFY2014 numbers which came in marginally below our as well as street expectations. The dollar revenues declined by ~0.8% qoq to US$258mn. Revenues from direct channel grew by 2.2% on a sequential basis; revenues from HP channel declined by ~8.7% qoq, impacted due to annual shutdown at HP and ramp down in certain projects. In INR terms, consoliated revenues came in at Rs.1,564cr, down 1.9% qoq. The Direct vs. HP business mix shifted to 63:37 in 1QFY2014 from 48:52 in 1QFY2013, further mitigating client concentration risk. Pricing remained stable during the quarter across businesses. EBITDA margin of the company declined by ~60bp qoq to 16.9%, which was key negative surprise in the result. Consequently, PAT declined by 1.7% qoq to Rs.187cr. The company added 11 new clients during the quarter, out of which 10 were added in direct channel. The company remained committed to increase revenues from direct channel. The stock is currently under review.

Economic and Political News

- Award of Rs.49,200cr Odisha, Tamil Nadu UMPPs pushed to June

- CDMA cos. Oppose TRAI suggestion on base price of 800MHz band

Corporate News

- Compat to hear Coal India plea against CCI penalty next month

- L&T Fi nance OFS price set at Rs.70/share

- CCI orde rs fresh probe against DLF