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Reports India

Indian stock market and companies daily report (May 12, 2014, Monday)

May 12, 2014, Monday, 05:32 GMT | 01:32 EST | 10:02 IST | 12:32 SGT
Contributed by Angel Broking


The Indian Markets are expected to open flat today with a positive bias tracking SGX Nifty which is trading higher by 0.2%. Most of the Asian markets are trading in the negative territory.

US stocks ended the choppy Friday session with small gains with Dow Jones Industrial Average settling at a new all-time high. Traders reacted favorably on expectations that the European Central Bank will introduce stimulus in June. Additionally, positive US economic data also boosted the investor sentiments. On the economic front, US wholesale inventories rose more than expected in March, rising by 1.1% as against economists expectations of 0.4%. In Europe however, stocks fell from a six-year high on Friday amid disappointing corporate earnings and lingering concerns about the conflict between Ukraine and pro-Russian separatists.

Meanwhile, Indian shares soared on Friday, with key benchmark indices climbing about 3% each, on optimism that Narendra Modi led Bharatiya Janata Party would form the government at the Centre after the conclusion of Lok Sabha elections on Monday. The results are scheduled to be announced on May 16, 2014.


Markets Today

The trend deciding level for the day is 22,787 / 6,794 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 23,256 - 23,518 / 6,936 - 7,013 levels. However, if NIFTY trades below 22,787 / 6,794 levels for the first half-an-hour of trade then it may correct 22,525 - 22,055 / 6,717 - 6,575 levels.


Result Review

Ranbaxy labs (CMP: Rs.469/TP:-/Upside:-)

Ranbaxy, posted numbers below the expectations. For the quarter, the company posted sales of Rs.2436cr V/s Rs.2,657cr expected, posting a dip of 0.2% ( Rs.2440cr in 1QCY2013). While, the quarterly sales were lower than expected the company met its annual guidance of sales of Rs.13,000cr for FY2014. Its key market USA , grew by almost 1 3% yoy during the quarter. On, the operating front, the OPM's came in at 4.9% V/s 6.4% expected and 4.0% in 1QCY2013. Apart from, the OPM, the other income dipped by 55.8% yoy, along with the higher taxation lead the company post a net loss before exceptions at Rs.93cr V/s Rs.46cr profit during the last corresponding period. This was much lower than expected net profit of Rs.240cr during the period. The reported net loss of the company was around Rs.74cr V/s net profit of Rs.125cr during the period. We remain neutral on the stock.

GSK Consumer (CMP:Rs.4,176/TP:-/Upside:-)

For 5QFY2014 GSK Consumer posted an 14.8% yoy growth in top-line to Rs.1,079cr. The top-line growth was aided by both higher volume and better realization. Gross margin rose by 191bp yoy and stood at 61.3%. The company's operating profit rose by 10.8% yoy to Rs.189cr. Bottom-line rose by 10% yoy to Rs.171cr aided by superior operating performance and a 30.6% yoy growth in other income. We maintain a neutral rating on the stock.

Relaxo Footwear (CMP: Rs.341/ TP: Rs.402/ Upside: 18%)

Relaxo reported strong set of numbers for 4QFY2014. The revenue for the quarter grew by whooping 27.3% yoy and stood at Rs.371 cr, way ahead than our expectation of Rs.290cr. The operating margin for the quarter expanded by 74bp on yoy basis and came in at 11.8%, ahead of our estimate of 10.3%, mainly because of lower than expected employee cost. Tax for the quarter stood at Rs.9cr (29.3% of PBT). On account of strong revenue growth and better than expected operating margin, the net profit for the quarter came in at Rs.22cr, 61.8% higher yoy and 63.0% higher than our estimate of Rs.13cr.

On annual basis, the revenue grew by substantial 20.0% to Rs.1,206cr with an operating margin of 11.7%, against our estimate of 11.3%. Interest expense came in at Rs.23cr. Consequently, the company reported a profit of Rs.66cr for FY2014, ahead than our estimate of Rs.57cr.

Looking at company's strong performance, we remain positive on the company with the long term growth triggers in place, which includes - 1) sufficient capacity expansion, 2) improving sales mix and 3) increasing brand visibility. At Rs.341, the stock is trading at 18.6x FY2015E earnings. As we rollover to FY2016E, we upgrade our recommendation to Buy on the stock with a revised target price of Rs.402, based on a target PE of 22x for FY2016E. We may change the estimates post management interaction.

HT Media (CMP: Rs.91 / TP: Rs.110 / Upside: 21%)

For 4QFY2014, HT Media reported modest 8.7% yoy growth in its top-line to Rs.544cr (slightly ahead of our estimates of Rs.532cr), aided by strong 20% yoy growth in advertising revenues in Hindi markets. Overall, the company reported 10.4% yoy growth in advertising revenues to Rs.417cr and 14.1% yoy growth in circulation revenue to Rs.66cr. On the EBITDA margin front, the company's margins contracted by 47bp yoy to 13.9%. Consequently, adjusted profit posted flat yoy growth to Rs.42cr. We recommend Buy on the stock with the target price of Rs.110.

Dena Bank- (CMP: Rs.63 / TP: Rs.76 / Upside: 21.3 %)

Dena Bank reported weak asset quality performance during the quarter, continuing the trend witnessed over last seven quarters. Over the last seven quarters until 4QFY2014, the bank's asset quality has faced tremendous pain, as absolute Gross NPAs have almost tripled, while net NPAs have more than tripled. Even during the quarter, absolute gross and Net NPAs continued the northward movement and grew by 26.6% and 31.9%, qoq respectively. On the operating performance front, while NII grew moderate at 9.3% yoy, non-interest income grew 15.7% yoy enabling bank to report operating profit growth of 11.7% yoy to Rs.448cr. Provisioning expense grew by 66.8% yoy to Rs.570cr thereby registering a PBT level loss of Rs.123cr. However tax reversals to the tune of Rs.310cr enabled bank to register earnings growth of 49.0% yoy to Rs.187cr. At the CMP, the stock trades at valuations of 0.4x FY2016E ABV. We maintain our Buy recommendation on the stock.


Result Preview

DB Corp (CMP: Rs.284 / TP: Rs.360 / Upside: 27%)

DB Corp is slated to announce its 4QFY2014 results. The company is expected to post 16.3% yoy growth in its top-line to Rs.463cr on the back of uptick in advertising revenue. The company's margins are expected to expand by 221bp yoy to 25.8%. Consequently, net profit is expected to grow by 27.9% yoy to Rs.71cr. We recommend Buy on the stock with the target price of Rs.360.


Economic and Political News

- Exports grow 5.3% in April

- Delhi Discoms meet CAG to resolve issues over Audit

- SEBI plans overhaul of delisting process


Corporate News

- Whyte and Mackay sale may face regulator scrutiny

- Matrix sells 4.8% in Tree House for Rs.50cr

- Bombay High Court grants bail to NSEL's ex CEO

Stock Market Forum