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Reports India

Indian stock market and companies daily report (May 13, 2014, Tuesday)

May 13, 2014, Tuesday, 05:32 GMT | 00:32 EST | 10:02 IST | 12:32 SGT
Contributed by Angel Broking

The Indian Markets are expected to open in the green today tracking strong start to SGX Nifty which is up by ~1% after exit polls showed that Narendra Modi led NDA could probably win the most seats in national parliamentary elections. Most of the Asian markets too are trading in the green following record closing highs for Dow Jones and S&P500 indices.

US stocks moved sharply higher over the course of the trading day on Monday. The strength on Wall Street was partly due to news of Chinese market reforms designed to increase liquidity, which helped offset concerns about the political situation in Ukraine. Additionally, news on the M&A front also generated some positive sentiments.

Meanwhile, Indian shares soared on Monday, extending Friday's sharp rally, amid hopes that the exit poll results due after market hours would show BJP and its allies winning a majority in the current elections. The results are scheduled to be announced on May 16, 2014.

Markets Today

The trend deciding level for the day is 23,378 / 6,966 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 23,746 - 23,942 / 7,069 - 7,123 levels. However, if NIFTY trades below 23,378 / 6,966 levels for the first half-an-hour of trade then it may correct 23,182 - 22,813 / 6,911 - 6,809 levels.

JLR registers strong retail volume growth in April 2014

JLR recorded a strong retail sales growth of 30% yoy in April 201 4 to 37,171 units. The volumes grew at a very strong rate across the globe, with China, Europe, Asia Pacific and UK regions witnessing a robust growth of 72%, 27%, 25% and 24% yoy respectively. Jaguar sales posted a strong growth of 17% yoy to 5,511 units, led by continued growth in the XF and XJ models and boosted further by incremental sales of the F type model. Land Rover sales too surged strongly by 33% yoy to 31,660 units, driven by continued ramp-up of the new Range Rover and the new Range Rover Sport and sustained momentum in Evoque sales.

We expect headwinds in the standalone business to continue in the near term due to weak macro-economic environment which is expected to continue impacting domestic volumes. Nevertheless, we expect JLR to sustain its strong performance driven by continued momentum in the global luxury vehicle market and aided further by the strong product launch pipeline and the success of the newly launched models. We retain our Accumulate rating on the Tata Motors stock with an SOTP based target price of Rs.487.

Result Review

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

For 4QFY2014, DB Corp's bottom line performance was better than our estimates, aided by lower than expected tax expense. The company reported 14.1% yoy growth in top-line to Rs.454cr (compared to our expectation of Rs.463cr) with advertising revenue posting 14.3% yoy growth to Rs.340cr On the operating front, DB Corp's margin came in almost flat yoy to 23.2%. However, net profit grew by 39.2% yoy to Rs.77cr (better than our expectation of Rs.71cr due to lower than expected tax expense). We recommend Buy on the stock with the target price of Rs.360.

Result Preview

Nestle India (CMP: Rs.4,833/ TP: -/ Upside: -)

Nestle India is set to announce its 1QCY2014 results today. We expect the Topline to grow by 9% yoy to Rs.2,450cr aided largely by higher prices. OPM is expected to decline by 124bp yoy to 22.4%. Net Profit is expected to increase by 11.8% yoy to Rs.312cr. We maintain a neutral rating on the stock.

Dr Reddy's Lab (CMP: Rs.2,730/ TP: Rs.3,634/ Upside: 33%)

DRL is expected to post a top-line growth of 16.2% to Rs.3,881cr. The company is expected to see strong traction in its US business. The company is expected to post an OPM of 24.4%, up from 21.4%in 4QFY201 3. The company is expected to post a net profit of Rs.825cr, a growth of 44.5% over the corresponding period of last year. We maintain our buy recommendation on the stock with a price target of Rs.3,634.

Bank of Baroda (CMP: Rs.839/ TP: / Upside: )

Bank of Baroda is scheduled to announce its 4QFY2014 results today. We expect the bank to report a moderate NII growth of 13.4% yoy to Rs.3,192cr. Non-interest income is also expected to de-grow by 10.7% yoy to Rs.1,064cr. Operating expenses are expected to grow by 2.9% yoy to Rs.1,876cr, thereby leading to operating profit growth of 9.0% yoy to Rs.2,379cr. Provisioning expenses are expected to de-grow by 42.5% yoy to Rs.941cr. Overall Net profit is expected to grow by 3.4% yoy to Rs.1,064cr. At the CMP, the stock is trading at 0.8x FY2016E ABV. We maintain our Neutral rating on the stock.

PNB (CMP: Rs.835 / TP: Rs.982/ Upside: 1 7.6%)

PNB is scheduled to announce its 4QFY2014 results today. We expect the bank to report moderate NII growth of 14.3% yoy to Rs.4,319cr. Non-interest income is expected to de-grow by 20.0% to Rs.939cr. Operating expenses are expected to increase by 20.7% yoy to Rs.2,536cr which would result in 4.5% de-growth in operating profit to Rs.2,723. Provisioning expenses for bank are expected to decrease by 15.5% yoy; net profit is expected to de-grow by 11.3% yoy at Rs.1,003cr. At the CMP, the stock trades at valuations of 0.7x FY2016E ABV. We maintain our Buy recommendation on the stock with a target price of Rs.982.

Economic and Political News

- India's IIP declined 0.5% in March 2014

- Retail inflation rises to 3 month high of 8.59% in April 2014

- Indian IT infrastructure market to touch US$1.9bn in 2014: Gartner

- Diesel prices hiked by Rs.1.09 per litre across the country

Corporate News

- Bharti Airtel to raise US$1.5bn bonds to refinance loans

- Aurobindo Pharma gets AP High Court nod for Curepro deal

- No relief for Infosys despite US$34mn US visa settlement

- Infosys hives off products and platform business into separate entity

- Cipla invests US$21mn in Chase Pharma for Alzheimer's drug development

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