Reports » India
Indian stock market and companies daily report (October 31, 2013, Thursday)
Indian markets are likely to open with a negative bias, tracking negative opening in SGX Nifty and most of the Asian markets.
After drifting lower over the course of morning trading on Wednesday, stocks saw some further downside following the Federal Reserve's monetary policy announcement. While the Fed maintained the pace of its asset purchases at $85 billion a month as was widely expected, the accompanying statement was seen as less dovish than anticipated. The statement from the Fed's monetary policy committee largely excluded any reference to the recent government shutdown and omitted previous remarks suggesting that tightening financial conditions could slow the pace of improvement in the economy and labor market. Meanwhile, the majority of the European markets ended Wednesday's session in negative territory as investors continued to exercise caution over Federal Reserve's monetary policy announcement.
Back home, the Indian markets rose on Wednesday, driven by FII buying amid expectations the U.S. Federal Reserve will keep its policy accommodative for the foreseeable future.
The deciding level for the day is 21,019 / 6,248 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 21,101 - 21,169 / 6,273 - 6,294 levels. However, if NIFTY trades below 21,019 / 6,248 levels for the first half-an-hour of trade then it may correct up to 20,952 -20,870 / 6,226 - 6,201 levels.
Governments asks RIL to surrender 81% of KG blocks
Media reports suggest that the Oil Ministry is likely to send notice to Reliance Industries (RIL) asking the company to give up 81% of its KG-D6 gas block as the time allocated for producing from those blocks had expired. The area sought by the Ministry is over 5,367sq km which RIL had offered to relinquish. It includes five discoveries for which the Directorate General of Hydrocarbon had opined that the company missed deadlines for submission of investment plans. The five discoveries are estimated to hold 0.81tcf of gas reserves. We await further clarity on this matter. Until then, we maintain our Neutral rating on the stock.
Infosys settles visa violations probe, pays US$34mn
Infosys yesterday announced that it has agreed to pay US$34mn to settle investigations by various United States government departments into its alleged misuse of visas in that country. This settlement is related to Immigration-9 (I-9) paperwork errors in 2010-1. During 2QFY2014 results, the company already made a provision of US35mn for visa related matters, so financially it will not have any impact on the company's P&L going ahead..
Infosys has been facing investigations in the US since 201 1 after a former employee accused the company of circumventing visa rules. The allegations was that Infosys had used short-term and less expensive B-1 visit visas instead of more expensive H-1B work visas to send Indian employees to work on projects in American companies. Infosys said there were no criminal charges or court rulings against the company and it denies and disputes any claims of visa fraud. Overseas firms send employees to the US for onsite work for their clients have to complete the I-9 form to verify the identity and employment authorisation of each employee coming to the US on a specific visa like H1-B. Infosys, however, maintained that there was no evidence that the I-9 paperwork violations allowed its employees to work beyond their visa authorisation. Asserting that the use of B-1 visas was for legitimate business purposes and not intended to circumvent the requirements of the H-1B programme, the company said only 0.02% of the days that its employees worked on US projects in 2012 were performed by B-1 visa holders. We believe it will not have any significant qualitative impact on the company with business from the clients coming as usual. We maintain our Accumulate rating on the stock with a target price of Rs.3480.
Bharti Airtel (CMP: Rs.359/ TP: -/ Upside: -)
For 2QFY2014, Bharti Airtel's revenues as well as EBITDA came better than expectations while bottomline was below our expectations due to higher finance charges as well as a one-time exceptional charge arising from a new regulatory levy at one of its international operations. Bharti's consolidated revenues grew by 5.0% qoq to Rs.21,343cr. The growth in revenues was mainly fueled by a strong 6.2% qoq increase in USD terms in the top line from African operations to US$1,119mn, which came as a positive surprise. In INR terms, the company's African operations revenues increased by 18.5% sequentially to Rs.7,027cr. On the other hand, revenues from domestic mobile services declined by 2.1% qoq to 11,354cr, 2Q being cyclically a weak quarter for telecom companies.
KPI's of India mobile business came in largely inline with expectations. India ARPM was flat qoq at 44paise while MOU declined by 4% qoq to 437min leading to a 4% qoq decline in ARPU to Rs.192/month. Data ARPU increased by 11% qoq to Rs.70; data as % of mobile revenues increased to 9.2% from 7.4% in 1QFY2014. Churn rate remained stable at 3.2%. In India, BhartiRs. 3G customer base during the quarter increased by 18% qoq to ~8mn with data usage per customer increasing by 14% qoq to 231MBs from 203MBs in 1QFY2014. Africa MOU increased by 7% to 143min while voice ARPM was down 2% qoq. On consolidated level, Bharti's EBITDA margin declined marginally by ~20bp to 32.0%. Africa EBITDA margin stood at 26.9%, marginally increased qoq and wireless India EBITDA margin improved by ~90bp qoq to 32.4% and was ~100 bps higher than our estimates. Profitability was hit due to higher finance charges. PAT came in at Rs.512cr, down 26% qoq.
Overall, the key surprise from the results was better than expected India cellular margins and Africa business revenue growth. Core India cellular KPIs for Bharti in 2Q was better than Idea. Consistent improvement on operational parameters, good growth in data services and signs of growth picking up in Africa are likely to drive the company's business growth in the upcoming quarters as well. Bharti continues to be our preferred pick amongst telcos due to its low-cost integrated model (owned tower infrastructure), established leadership in revenue and subscriber market share and relatively better KPIs.
Nestle India (CMP: Rs.5,595/TP:-/Upside:-)
For 3QCY201 3 Nestle India posted a 11.0% yoy growth in net sales to Rs.2,348cr, which was in-line with estimates aided by better realizations and higher volumes in certain product categories. OPM stood at 20.5% down 45bp on yoy basis. Depreciation costs rose 13.5% yoy on account of addition of new capacity and amortization of capitalized borrowing costs. Bottom-line rose by 6.7% yoy to Rs.285cr, in-line with estimates. We maintain a neutral rating on the stock.
Lupin (CMP: Rs.902 /TP: - /Upside: -)
Lupin, for 2QFY2014, the company posted better than expected numbers, both on the top and bottom-line. For the quarter, the company posted sales of Rs.2632cr V/s expectation of Rs.2547cr, a registering a yoy growth of 17.5%. The sales growth was driven by the exports. Overall the formulation sales grew by 17% yoy, driven by US, Europe which grew by 32% and 18% respectively. Amongst the developed markets, Japan de-grew by 6.0% during the quarter. Amongst the other markets, South Africa and ROW grew by 24% and 18% respectively. India, on the hand grew by 9% yoy during the quarter. It's OPM expanded by 340bp yoy during the period at 23.7% in line with expectations. Thus, the net profit rose by 40.1% yoy in 2QFY2014 to end the period at Rs.406.2cr V/s expectations of Rs.338cr.We remain neutral on the stock.
DLF (CMP: Rs.139/ TP: under review)
For 2QFY2014, DLF reported disappointing set of numbers which were above consensus estimate, both on revenue and profitability front. On the top-line front, DLF reported revenue of Rs.1,956cr in 2QFY2014, indicating a decline of 15.5% yoy; which was below consensus estimate of Rs.2,314cr. EBIDTAM came in at 30.4% in 2QFY2014 which was below street estimate of 38.6%. On the back of poor sales, high interest cost and higher effective tax rate during the quarter, company reported a PAT of Rs.100cr (against consensus estimate of Rs.181 cr) in 2QFY2014, indicating a decline of 44.8% yoy. We maintain our Buy rating on the stock. However our target price is under review. We will come out with a detailed note after having a conference call with the management.
LIC Housing (CMP: Rs.219/ TP: -/ Upside: -)
LIC Housing Finance reported a healthy set of numbers for the quarter, with bottom-line growth of 28% yoy. On the operating front, NII growth for the company came in healthy at 23.5% yoy to Rs.476cr (loan book growth of 20.4% yoy and margins higher by 12bp yoy), while the non-interest income grew unexpectedly by 156.4% yoy to Rs.56cr. On a sequential basis, the company witnessed margin pressures and its NIMs declined 8bp qoq to 2.2%. Overall, the company reported operating profit growth of 34.9% yoy to Rs.458cr. Provisioning expenses for the quarter came in at Rs.34cr as compared to Rs.17cr in 1 QFY2014, as the company could make higher provisions aided by higher non-interest income. On the asset quality front, Gross NPA ratio for the company declined 7bp qoq (higher 13bp yoy) to 0.73%, while net NPA ratio declined 8bp qoq (higher 1 6bp yoy) to 0.44%. We await clarity from the management regarding the outlook on the margins and the asset quality going ahead. Currently, we maintain our Neutral rating on the stock.
IDBI Bank (CMP: Rs.66 / TP:-/ Upside: -)
IDBI Bank reported weak operating performance for the quarter, with sharp earnings de-growth of 60.2% to Rs.192cr. The bank's operating income grew at modest 6.7% yoy to Rs.2,062cr (within which NII grew by 18.8% yoy to Rs.1,484cr, while non-interest income declined 15.2% yoy to Rs.579cr). Operating expenses for the bank grew by 4.6% yoy to Rs.788cr, thereby aiding 8.1% yoy operating profit growth to Rs.1,275cr. The bank's provisioning expenses grew 77.7% yoy to Rs.879cr.
On the asset quality front, the bank witnessed continued weakness, as slippages for the bank spiked to 4.4%, as compared to 3.4% in 1QFY2014 and 1.4% in 2QFY2013. As a result, absolute Gross NPAs increased by around Rs.1,400cr to Rs.9,370cr (vs. quarterly increase of around Rs.1,500cr in previous quarter), while the Net NPAs increased by around Rs.1,300cr to Rs.5,174cr (vs. quarterly increase of Rs.770cr in previous quarter). PCR (incl. tech write-off) for the bank declined more than 500bp sequentially to 62.7%. We maintain our Neutral rating on the stock.
Sanofi India (CMP: Rs.2490 /TP: - /Upside: -)
Sanofi India, posted good set of numbers. On sales front, the company posted, a sales Rs.475cr V/s expected Rs.410cr to report a growth of 19.1%. The OPM, came in at 21.1%, an expansion of 80bps (was 20.3% in 3QCY2013). This along with a higher other income, aided the net profit of the company to come in at Rs.76.9cr, a yoy growth of 49.9%. We recommend a neutral on the stock.
Oriental Bank of Commerce (CMP: Rs.153/ TP: / Upside:)
Oriental Bank of Commerce (OBC) delivered weak operating performance for the quarter. Net Interest Income for the bank grew moderately at 10.7% yoy to Rs.1,281cr, while its non-interest income de-grew by 23.3% yoy to Rs.312cr, leading to a muted growth of 1.9% yoy in operating income to Rs.1,593cr. Operating expenses grew largely in-line with expectations by 19.5% yoy to Rs.768cr and hence pre-provisioning profit de-grew by 1 0.4% yoy to Rs.825cr. On the asset quality front, the bank witnessed continued weakness, as the absolute Gross and Net NPA levels increased sequentially by 13.6% and 16.6% respectively. Provisioning expenses grew by 19.7% yoy to Rs.551cr, thereby leading to PBT level earnings de-growth 40.4% yoy to Rs.275cr. However, aided by unexpected 85.5% yoy decline in tax expense, the earnings decline was limited to 16.7% yoy to Rs.252cr. At the CMP, the stock is trading at 0.4x FY2015E ABV. We maintain our Neutral recommendation on the stock.
GMDC (CMP: Rs.104/ TP: Under Review/ Upside: -)
GMDC reported disappointing results for 2QFY2014 results. The company's net sales declined by 54.2% yoy to Rs.175cr. Its EBITDA declined 66.8% yoy to Rs.72cr due to decline in sales. The other income decreased by 50.9% yoy to Rs.30cr; hence, the company's net profit declined by 72.6% to Rs.46cr. We maintain our positive stance on the stock; however, we keep our target price under review.
Jagran (CMP: Rs.86/TP: Rs.108/Upside: 26%)
For 2QFY2014, Jagran Prakashan's standalone top-line performance was better than expectation, growing by 19.6% yoy to Rs.385cr (compared to our expectation of Rs.371cr), primarily driven 10.7% yoy growth in advertising revenues to Rs.263cr. The company also reported healthy 14.5% yoy growth in circulation revenues to Rs.83cr. However, its OPM contracted by 64bp yoy to 22.6%. The company reported forex loss of Rs.10cr in the quarter compared to forex gain of Rs.7cr in 2QFY2013. Consequently, profit declined by 32.4% yoy to Rs.47cr (compared to our expectation of Rs.51cr). The company has also announced buyback of up to maximum 50 lakh equity shares at Rs.95 for an aggregate amount of Rs.47.5cr, which should lend support to the stock price. At the current market price, Jagran is trading at 12.0x FY2015E consolidated EPS of Rs.7.2. We maintain Buy on the stock with target price of Rs.108.
PVR (CMP: Rs.556/TP: -/Upside: -)
For 2QFY2014, PVR's top line performance was better than our expectations, recording robust 89% yoy growth to Rs.363cr, mainly on account of consolidation of cinemax. However, even on standalone basis, PVR reported robust 32.0% yoy growth in top line to Rs.237cr on back of good performance in movie exhibition business.
The consolidated revenues from movie exhibition business have almost doubled from Rs.185cr in 2QFY2013 to Rs.343cr in 2QFY2014. On the operating front, the company's EBITDA margin expanded by 110bp yoy to 19.9%. Consequently, consolidated profit grew by 71.4% yoy to Rs.28cr. At the current market price, PVR is trading at 25.8x FY2015E consolidated EPS of Rs.21.5. We believe the stock is fairly valued and hence, recommend Neutral rating on the stock.
Indoco Remedies (CMP: Rs.79 /TP: - /Upside: -)
Indoco Remedies, posted better than expected results during the quarter on all fronts. The revenue came in at Rs.195cr, a growth of 18.5% yoy V/s expectation of Rs.155cr. The domestic markets grew by 1 1.1% yoy, while exports grew by 35.7% yoy. The gross margins expended by 2.8% yoy, however the higher rise in the other expenditure of 44.5% yoy aided the OPM come in at 13.2% V/s expectation of 12.3% a yoy dip of 2.2%. However, this along with the other income of Rs.7.7cr against a loss of Rs.2.4cr, lead the net profit to come in at of Rs.16cr V/s expectation of Rs.6.3cr, a yoy growth of 32.8%. We recommend a neutral on the stock, given the valuations.
Dr Reddys Labs (CMP: Rs.2523 /TP: - /Upside: -)
Dr Reddy's is expected to post a top-line de- growth of 1 6.1% yoy to Rs.3,344cr, on account of the base impact. The company is expected to post an OPM of 20.8%, as against 20.1% in the corresponding period of the previous year. On the net profit front, the company is expected to post a net profit of Rs.438cr, a growth of 7.5% over the corresponding period of last year. The company is expected to see strong traction in its Indian and Russian formulation businesses. We recommend a neutral on stock.
Bank of Baroda (CMP: Rs.581 / TP: - / Upside: -)
Bank of Baroda is scheduled to announce its 2QFY2014 results today. We expect the bank to report subdued NII growth of 4.1% yoy to Rs.2,979cr. Non-interest income is expected to be flat at Rs.843cr. Operating profit is expected to de-grow 8.7% yoy on back of 25.9% yoy increase in operating expenses. The Provisioning expenses are expected to increase by 34.1% yoy to Rs.883cr (on back of lower base in 2QFY2013). Overall, we expect the bank to earnings to de-grow by 22.5% yoy at Rs.1,008cr. At CMP, the stock trades at valuations of 0.7x FY2015E ABV. Hence, we recommend a Neutral recommendation on the stock.
Cadila Healthcare (CMP: Rs.660 /TP: 894 /Upside: 35.3%)
Cadila Healthcare is expected to post a net sales growth of 8.3% yoy to Rs.1,639cr. We expect the company's OPM to dip by 190bp yoy to 16.0%. Net profit is expected to grow by 26.5% yoy to Rs.199.8cr on back of lower tax outgo. We recommend a buy on the stock.
Bank of India (CMP: Rs.173 / TP: - / Upside: - )
Bank of India is scheduled to announce its 2QFY2014 results today. We expect the bank to report healthy NII growth of 18.8% yoy to Rs.2,609cr. Non-interest income is expected to de-grow by 6.0% to Rs.841 cr. Operating expenses are expected to grow at 21.2% yoy to Rs.1,498cr. Thus Bank is expected to report operating profit growth of 5.3% yoy at Rs.1,952cr. Provisioning expenses is expected to decrease by 45.6% (on back of higher base in 2QFY2013) yoy to Rs.845, thereby leading to PAT growth of 142.2% yoy to Rs.731cr. At the CMP, the stock trades at valuations of 0.4x FY2015E ABV. We maintain our Neutral recommendation on the stock.
Union Bank (CMP: Rs.115 / TP: -/ Upside:- )
Union Bank is scheduled to announce its 2QFY2014 results today. The NII for the bank is expected to grow by just 3.4% yoy at Rs.1,914cr. Non-interest income is expected to be almost flat yoy to Rs.555cr. Operating expenses are expected to increase by 12.4% yoy to Rs.1,263cr, while provisioning expenses are expected to increase by 33.5% yoy to Rs.650cr. Overall, Net profit is expected to de-grow by 33.7% yoy to Rs.367cr. At CMP, stock trades at 0.4x FY2015E P/ABV. Hence, we maintain our Neutral recommendation on the stock.
Allahabad Bank (CMP: Rs.81 / TP: -/ Downside:- )
Allahabad Bank is scheduled to announce its 2QFY2014 results today. We expect the bank to report growth of 9.8% yoy in Net Interest Income (NII) to Rs.1,289cr. Non-interest income is expected to grow moderately by 4.7% yoy to Rs.316cr. Operating expenses are expected to increase by 19.3% yoy to Rs.804cr. Provisioning expenses are expected to increase by 6.4% yoy to Rs.494cr. Hence Net profit is expected to de-grow by 1.8% yoy to Rs.230cr. At the CMP, the stock is trading at 0.4x FY2015E ABV. We maintain our Neutral recommendation on the stock.
FAG Bearings (CMP: Rs.1,323/ TP: -/ Upside: -)
FAG Bearings is set to announce its 3QCY2013 results today. We expect the company's revenue to register a decline of ~13% yoy (~1% qoq) to Rs.308cr as slowdown in the automotive and industrial sectors is expected to impact the performance. On the operating front, we expect EBITDA margins to contract ~142bp yoy (~30bp qoq) to 13.2% largely due to lower utilization levels and adverse currency movement. As a result, net profit is expected to decline by ~26% yoy to Rs.27cr. At Rs.1,323, the stock is trading at 14.3x CY2014 earnings. Currently, we have a Neutral rating on the stock.
Dishman Pharmaceuticals (CMP: Rs.63 /TP: 73 /Upside: 15.8%)
Dishman Pharmaceuticals, during the quarter, is expected to post sales Rs.307cr, a yoy growth of 6.0%. On the operating front, OPM is expected to come in at 22.5%, an expansion of 234bps. However, on back of the higher interest expenditure i.e a 51.1% yoy rise would lead the net profit to come at Rs.21cr, a yoy dip of 21.1 %. We maintain our buy on the stock with a price target of Rs.73.
Economic and Political News
- Coal Ministry panel agrees to allot 3 coal blocks to mining PSU's
- Parikh panel recommends Rs 5/litre hike in diesel
- Cab inet approves Pharma Purchase Policy
- Wipro seeks more time from Government to complete its SEZ in TN
- Mallya rejigs his holdings in Kingfisher Airlines
- Maruti to reduce import content by 20% this year to maintain profitability
Stock Market Forum
- IntelGenx (IGX.V) Reports Second Quarter 2012 Results and Highlights Recent Developme
12 December 2013
- 12 December Free Best Trading Calls
12 December 2013
- Indian Share market down on global sentiments
11 December 2013
- Intraday NSE Stock Calls Free for 11/12/13
11 December 2013
- Petrichor (PTP.V) Closes First Tranche Convertible Debenture Financing for Gross Proc
10 December 2013
- Mcx technical report 10 december
10 December 2013
- Stock Nifty Technical Report 10 December
10 December 2013
- Equity Tips for Today free 10/12/13
10 December 2013
- Mcx commodity trend 09 december
9 December 2013
- Forex Technical Trend 09 December
9 December 2013