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Reports India

Indian stock market and companies daily report (May 15, 2014, Thursday)

May 15, 2014, Thursday, 05:39 GMT | 00:39 EST | 09:09 IST | 11:39 SGT
Contributed by Angel Broking

The Indian Markets are expected to open on a positive note today tracking positive start to SGX Nifty which is trading up by ~0.2%.

US stocks moved notably lower over the course of the trading day on Wednesday after showing a lack of direction throughout the session. Selling pressure picked up in afternoon trading, dragging the major averages into negative territory. The weakness on Wall Street was partly due to profit taking and partly due to troubling inflation data (producer price data). The report from the Labor Department showed that producer prices rose at their fastest pace by 0.6% in April following a 0.5% increase in March against Economists expectations of 0.2%. Meanwhile, European stocks clawed back from steep early losses to finish little changed from the previous session

On domestic front, Indian shares fell modestly on profit taking after hitting successive record highs in the past three sessions. Investors now await the election results on May 16 for confirmation whether the actual results of a clear win for Narendra Modi led NDA in Lok Sabha elections will come in line with exit polls.

Markets Today

The trend deciding level for the day is 23,844 / 7,111 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 23,935 - 24,056 / 7,140 - 7,172 levels. However, if NIFTY trades below 23,844 / 7,111 levels for the first half-an-hour of trade then it may correct 23,724 - 23,633 / 7,079 - 7,049 levels.

Result Review

Asian Paints (CMP: Rs.557/TP:-/Upside:-)

For 4QFY2014 Asian Paints posted a strong 21.4% yoy growth in its consolidated top-line to Rs.3,413cr. Healthy double digit volume growth (estimated to be ~15%) in the domestic decorative business aided the top-line growth. Volume growth was lead by healthy demand from tier 2 and tier 3 cities. Industrial paints and automotive coatings continue to be impacted by slow-down in the economy. OPM fell by 16bp on a yoy basis to 13.6% on account of higher raw material costs. Bottom-line rose by 14.3% yoy to Rs.287cr. We maintain a neutral rating on the stock.

Result Preview

Bajaj Auto (CMP: Rs.2,030/ TP: Rs.2,460/ Upside: 21%)

Bajaj Auto (BJAUT) is scheduled to announce its 4QFY2014 results today. We expect Bajaj Auto to register a strong earnings growth of ~10% yoy to Rs.835cr despite a modest growth in its top-line (~2% yoy). The top-line at Rs.4,836cr is expected to be impacted due to the weakness in domestic sales (down ~13% yoy), even as export volumes registered a healthy growth of ~9% yoy. Led by a favorable exchange rate, the company's EBITDA margins are expected to surge ~310bp yoy to 20.7% during the quarter. At the CMP, the stock is trading at 13.7x FY2016E earnings. We maintain our Buy rating on the stock with a target price of Rs.2,460.

Bank of India (CMP: Rs.273 / TP: Rs.296 / Upside: 8.5%)

Bank of India is scheduled to announce its 4QFY2014 results today. We expect the bank to report NII growth of 12.8% yoy to Rs.2,792cr. Non-interest income is expected to grow weak by 3.0% to Rs.1,127cr. Operating expenses are expected to grow by 19.6% yoy to Rs.1,788cr. Bank is expected to report operating profit growth of 2.7% yoy at Rs.2,131cr. Provisioning expenses is expected to decrease by 19.9% yoy at Rs.1,210. Overall, earnings for bank are expected to de-grow by 4.8% yoy to Rs.720cr. At the CMP, the stock trades at valuations of 0.6x FY2016E ABV. We maintain our Accumulate recommendation on the stock.

JK Bank (CMP: Rs.1,888 / TP: - / Upside: -)

Jammu and Kashmir bank is slated to announce its 4QFY2014 results today. We expect the bank to report a moderate NII growth of 8.1% yoy to Rs.685cr, on back advance growth of 26.0% yoy. Non-interest income is expected to de-grow by 38.3% yoy to Rs.129cr. Operating expenses are expected to increase by 10.6% yoy to Rs.336cr. Provisioning is expected to be lower at Rs.74cr as compared to Rs.179cr reported in 4QFY2013. Hence, we expect the bank to report PAT growth of 12.9% yoy during the quarter to Rs.282cr. At the CMP, the stock is trading at 1.2x FY2016E ABV. We recommend a Neutral rating on the stock.

Apollo Tyres (CMP: Rs.168/ TP: Rs.180/ Upside: 7%)

Apollo Tyres (APTY) is slated to announce its 4QFY2014 results today. On a consolidated basis, we expect the company to register a healthy top-line growth of ~6% yoy to Rs.3,231cr driven largely by strong growth in Europe and further aided by translation gains. The top-line performance though is not comparable as the company sold-off its passenger car tyre plant in South Africa during 3QFY2014. Consolidated EBITDA margins are expected to improve sharply by ~155bp yoy to 13.3% on the back of strong operating performance in Europe and led by easing of natural rubber prices at the standalone level. Hence we expect the bottom-line to surge ~68% yoy to Rs.209cr during the quarter. At the CMP, the stock is trading at 7.4x its FY2016E earnings. Currently, we have an Accumulate rating on the stock with a target price of Rs.180.

NCC (CMP: Rs.71 / TP: / Upside: )

We expect NCC to post a subdued 5.7% yoy growth in its top-line to Rs.1,840cr. The EBITDA margin is expected to contract by 60bp yoy to 8.4% for the quarter. Subdued top-line growth and margin contraction is expected to result in flat performance yoy on the earnings front, leading to a net profit of Rs.27cr. We recommend Neutral rating on the stock.

Economic and Political News

- Government to buy Power Grid subsidiary at book value

- Maharashtra, Gujarat face stiff opposition to APMC liberalisation

- Finance Ministry wants review of FDI policy for LLPs, DIPP disagrees

- Centre sets up panel to identify more coal blocks for bidding

Corporate News

- Wipro wins 7-year contract from Britan's Xoserve

- Bajaj Auto union postpones strike indefinitely

- Welspun Renewables commissions 19MW solar plant in Karnataka

- Tata Motors launches three trucks of Prima range in Qatar

- Domestic iron ore prices will not fluctuate much: NMDC

- Avantha Group signs US$15mn deal with Spanish company