Indian stock market and companies daily report (March 30, 2012, Friday)

The Indian markets are expected to open in the red tracing negative opening in most of the Asian indices. Asian stocks fell for a second day as growth in U.S. durable-goods orders trailed estimates.
The US markets drifted lower over the course of the day on account of profit booking as some traders cashed in on the recent strength in the markets amid calls by a number of analysts for a correction. Traders also reacted negatively to the latest batch of U.S. economic data, including a report from the Labor Department showing that weekly jobless claims came in above economist estimates. However the indices recovered significantly in the later sessions and eventually ended up near the opening.
Indian shares extended losses for a second consecutive session on Thursday, as concerns about growth prospects in the world's two largest economies prompted investors to square off long positions on the expiry of March series derivative contracts.

Markets Today
The trend deciding level for the day is 17,136/5,200 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,232 – 17,342/5,231 – 5,267 levels. However, if NIFTY trades below 17,136/5,200 levels for the first half-an-hour of trade then it may correct up to 17,026 – 16,930/5,164 – 5,133 levels.

TCS to provide banking solution - BaNCS to AmBank, Malaysia
TCS' financial services platform, TCS BaNCS, will replace Malaysian AmBank's core banking engine. This integrated banking suite, spanning conventional and Islamic banking, will support both retail banking and lending functionalities. TCS BaNCS will help expand AmBank's business into new areas. It will also enable development and the scalability required to meet both current and future market and regulatory needs. Due to this deployment, TCS may soon have a regional support centre for TCS BaNCS in Kuala Lumpur. We maintain Accumulate rating on the stock with a target price of Rs.1,262.

NTPC Tamil Nadu Energy Co. commissions Unit I of Vallur Power Project
NTPC Tamil Nadu Energy Co. Ltd. a JV of NTPC Ltd. and TNEB has commissioned Unit I (500 MW) of Vallur Thermal Power Project on March 28, 2012. With this, the total capacity of NTPC group has become 36,514 MW. In all NTPC group has commissioned 2,320MW of capacity in FY2012 till date, which is below the initial target of 4,320MW. At the CMP, the stock is trading at 1.6x FY2013E P/BV. We maintain a Buy on the stock with a Target Price of Rs.199.

Economic and Political News
- February infra output up 6.8% yoy
- Indian GDP to grow at 7.5% in FY2013: Fitch
- Government will clarify stance on P-Notes taxation: Finance Minister

Corporate News
- Tata Motors hikes commercial vehicle prices by up to Rs.60,000
- Tata Motors to invest Rs.600cr on defense vehicles
- NTPC to halt expansion of gas-based projects
- Bharat Forge earmarks Rs.100cr to develop artillery gun

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Share Prices in India

A share price is the value of a single or a number of shares or saleable stocks of a particular company. Once an investor has purchased the shares, he becomes a Share holder of that company that has issued the share.

The research analysts believe that the share price deviation results on the basis of seasonal and temporal patterns. It has been noted that the returns is significantly more then what it is in other months and on Mondays the share price is down more than on any other day.

These effects have been observed by the research people on the basis of these fluctuations.

The technical analysis to extract information based on future share price movements from historical data. As a result of such an unpredictable or behavior the huge amount of data available researchers for analysis causes the fluctuations.

The causes an element of unpredictability in the share prices, depending on what the market has achieved so far. When viwed over a long duration the stock prices are directly or indirectly related or the dividends to the earnings, and cause a fluctuation in the market value.

The desire of the investors has led into trading of shares. The stock exchange is the place, where buying/selling of the stocks take place.

A stock broker usually represents the stock trader, who buys the shares on his/her behalf. A company lists its shares on the BSE or NSE stock exchange by maintaining the listing requirements of the particular stock exchange.

In India, BSE and NSE hold the rights for all its investors.

Small companies that cannot qualify or cannot meet the listing requirements of the major exchanges can be traded over the counter using the off-exchange mechanism in which trading can take place directly between both the parties.

When an investor wants to buy shares, he purchases them via the stock broker. The brokers normally charge a fixed amount of commission over the prices. Another way to buy shares is by purchasing them directly from the company at the originally listed prices.

A direct public offering is an initial public offering in which the shares are directly purchased from the company without the aid of brokers.

The share prices are normally not affected when the stock broker buys the shares on the behest of the investor.

Selling stock is similar to buying it. Generally the investor will buy when the share prices are low and sell them when the share prices are high. Even while purchasing the broker has a certain fee depending on the type of brokerage services that he is offering to the investor.

The share prices play an important role in the profit or loss statement of the investor.  So, after any transactions, the seller is then entitled to all the money, but he must make sure to keep a regular track of his earnings.

Daily Report for Indian Stock Market

Vision on markets today

A lower than expected economic growth in the third quarter led to bearish outlook on the Street yesterday. The BSE Sensex plunged over 250 points from the day's high to fall into negative province in afternoon session. The Sensex closed up 21.56 points at 17752.68, while the broader Nifty index up 9.7 points at 5385.20. The third quarter gross domestic product (GDP) grew at 6.1%, falling short of consent guess that had pegged GDP growth at 6.3%. This is the slowest pace of economic growth since 2008. BSE Midcap Index was up 1.10% and BSE Smallcap Index moved 0.62% higher. Amongst the sectoral indices, BSE Oil&Gas Index gained 2.53%, BSE Power Index moved 0.28% higher and BSE Realty Index advanced 1.10%. Whereas BSE Capital Goods Index was down 1.59% and BSE Bankex slipped 0.59%. The Major Sensex gainers were ONGC, Sterlite Industries, Tata steel, Reliance Industries, and Wipro up 3.46%, 2.98%, 2.90%, 2.84% and 2.72%. Whereas Larsen & Toubro, Jindal Steel, HDFC Bank, Maruti Suzuki and Tata Motors were down 2.91%, 1.81%, 2.34%, 1.02%, 0.68% respectively. Shares of ONGC pitch higher on reports that the government is set to initiate its FPO through share auction. The government is likely to mount around Rs.124Bn.

Market breadth was muscular at ~1.23x as investors bought large lid stocks. On interim basis, FIIs bought equity of Rs.5.80Bn while domestic institutions sold equity of Rs.4.31Bn.

Asian markets are mixed today, as Japanese stocks are increasing while Chinese are down after a weak close for the US markets.

We anticipate a cautious opening for the Indian markets which tumbled on profit taking from the investors yesterday. Weak GDP data announced yesterday may oppose investors for strong buying in the Indian markets today.

Economic and Mutual Improvement

The government's financial deficit target for the current year has been violated in January, and with the numbers for the two months still to come, the gap between expenditure and revenue may extend further. At the end of the 10 months ending January, the financial deficit was Rs 4, 34,933 crore or 105.4% of the target, the Controller General of Accounts (CGA) said.

Bustling stock

In one of the prime property covenant in the country in recent years, the real estate division of Adani Enterprises (AEL) has bought a two-acre land parcel in Mumbai from property developer HDIL for Rs 900 crore. The plot is situated at the city’s Andheri suburb. It was component of a large mixed-use project being developed by HDIL, sources said.

ONGC’s overseas investigation arm ONGC Videsh Ltd (OVL) and GAIL India have confirmed their awareness in bidding for UK-based Cove Energy. The association may have to quote a price in surplus of $1.77 billion, the amount already quoted by Thai rigid PTT.

A joint venture (JV) between BGR Energy Systems and Hitachi Power Europe has appeared as the lowest bidder for NTPC’s Rs 16,000-crore supercritical boiler order. BHEL had appeared as the second-lowest bidder, while a JV between Larsen & Toubro (L&T) and Mitsubishi Heavy Industries was placed third lowest, an official from NTPC said.

Arvind Ltd, the textile chief is looking to liquidate about 1.5 million square meters of its enormous tracts of land in Gujarat and Karnataka with the predictable revenues of Rs 5000 crore over the next two years' time.

State-owned oil companies today hiked jet fuel price by 3.2% on the back of firming up of global oil tariff.

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Indian stock market and companies daily report (February 28, 2012, Tuesday)

Analysis on markets today

Indian markets are expected to open in the red following the negative cues from the markets worldwide. The Asian markets which saw heavy selling in yesterday’s session have opened in red this morning.
The US markets staged a significant recovery after moving notably lower in early trading on Monday, eventually ending the session flat. Renewed concerns about the financial situation in Europe contributed to the initial weakness on Wall Street, with traders reacting negatively to a statement from the G20 finance ministers and central bank governors. Economic risks of European markets were in focus again during Monday's trading session. The continued rise in oil prices, due to the increasing tensions in the nuclear dispute with Iran, has investors concerned.
Meanwhile Indian shares hit a three-and-a-half week low on Monday as concerns that rising oil prices prompted investors to unwind long positions built up over the past few weeks. Further, the concerns over the political outcome post UP Assembly election results, to be declared next week too weighed down the markets.

Markets Today
The trend deciding level for the day is 17,601 / 5,333 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,820 – 18,194 / 5,398 – 5,515 levels. However, if NIFTY trades below 17,601 / 5,333 levels for the first half-an-hour of trade then it may correct up to 17,227 – 17,007 / 5,216 – 5,151 levels.

Bharti selects Infosys as technology partner for airtel money
Bharti Airtel (Bharti) has picked up Infosys as its partner for ‘airtel money’ – a mobile wallet service by a mobile operator. Under this partnership, Infosys WallEdgeTM – the mobile commerce platform of Infosys will enable the mobile wallet service to support cashless payment and settlement needs of diverse customer segments. FinacleTM Digital Commerce is at the core of this platform. It facilitates the creation of a unique ecosystem of card issuers, merchants, and financial and retail institutions to offer customers a wide spectrum of payment options for their transactions. This platform will enable ‘airtel money’ customers to pay bills, recharge accounts, shop at over 7,000+ merchant outlets and transact online through multiple channels, including mobile phones, IVR and ATMs.
Infosys WallEdgeTM platform is delivered through private cloud; it creates a comprehensive shared services framework that allows members of the ecosystem to process payment instructions seamlessly and cost efficiently. We continue to maintain our Neutral view on Bharti and Accumulate rating on Infosys with a target price of Rs.3,047.

BHEL bags order worth Rs.774cr
BHEL has bagged order worth Rs.774cr from ONGC. The company will supply six onshore drilling rigs to ONGC. Various problems on the business front, envisaged in many of our earlier notes, are coming to the fore for BHEL – including dismal order intake, no signs of let up in competition (domestic and international) and order book growth under threat (9MFY2012 revenue exceeds 9MFY2012 order inflow) – all of which put serious concerns over the company’s long-term growth. Although we believe that on the valuation front the stock is undemanding at PE multiple of <11x its FY2013E earnings, we believe earnings would face severe strain going ahead, given the structural issues. Hence, we continue to maintain our negative stance on BHEL.

Result Review
Goodyear India Ltd- 4QCY2011 and CY2011
Goodyear India Ltd. (Goodyear) reported revenue growth of 16% yoy to Rs.395cr in 4QCY2011 against our expectation of 30% growth to Rs.441cr. The company's annual sales stood at Rs.1,516cr, 3% lower than our estimate of Rs.1,562cr for CY2011. Higher raw-material costs were offset by the decline in other expenses, resulting in EBITDA margin increasing marginally by 7bp to 8.7% in 4QCY2011 from 8.6% in 4QCY2010. For CY2011, EBITDA margin declined by 130bp yoy to 7.4% from 8.7% in CY2010 on account of higher raw-material costs and employee expenses. Net profit for 4QCY2011 stood at Rs.20cr, 10% lower yoy and 9% lower than our estimate of Rs.22cr.
As we roll over to CY2013E, we have revised our target price upwards to Rs.484, based on a target PE of 8x its CY2013E earnings with a Buy rating on the stock.

Result Preview
Bosch – 4QCY2011
Bosch is slated to announce its 4QCY2011 results. We expect the company’s revenue to post 10% yoy growth to Rs.1,930cr. On the operating front, the company is expected to post a 140bp yoy expansion in its operating margin to 17.8%. Hence, net profit is expected to register a 9% yoy increase to Rs.230cr. The stock rating is under review.

Economic and Political News
- Power Ministry moves cabinet note for duty on equipment imports
- Pvt. Firms may be allowed to bid for intra-state power transmission projects
- Govt. wont auction all 2G Band at one go

Corporate News
- Infosys not to get SEZ status: Mamata
- Investors of Sterlite, Sesa resist merger
- GVK in talks with UK’s BG to sell deep-water block stake

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Stock Market Update on Maruti Suzuki for 1QFY2012

Stock Market Update on Maruti Suzuki for 1QFY2012 with an Accumulate recommendation and a Target Price of `1322 (12 months)

Maruti Suzuki (Maruti) reported an in-line operating performance for 1QFY2012; however, net profit came in significantly higher than our estimates, driven by a sharp jump in other income on account of long-term capital gains (~`40cr) and high treasury yields on investments. We broadly maintain our volume and earnings estimates and continue to maintain our Accumulate rating on the stock.

Muted top-line performance on flat volumes, other income boosts bottom line: For 1QFY2012, Maruti reported 3.6% yoy (down 15.5% qoq) growth in net sales to `8,529cr, in-line with our estimates, aided by a 4% yoy increase in average net realisation, led by better product mix (higher contribution of diesel vehicles) and price increases. Volume growth remained sluggish and posted a 0.6% yoy decline (18% qoq), impacted largely by the demand slowdown in the small car segment and production loss due to a 13-day strike at Manesar plant. EBITDA margin was in-line with our estimates at 9.5% (almost flat yoy), but it was down by 46bp qoq. Raw-material costs rose by 81bp yoy (70bp qoq) to 80.4% of sales, while royalty and selling and distribution expenses declined by 50bp yoy each, thus benefitting the margin. Net profit increased by 18% yoy (down 16.8% qoq) to `549cr, 22.6% ahead of our estimates, led by higher-than-expected other income.

Outlook and valuation: We continue to remain positive on the long-term volume growth in the passenger car industry, led by sustainable economic growth and low penetration levels in the country. However, considering the near-term macro headwinds, we remain cautious on short-term volume growth in the passenger car industry. We expect Maruti to post a ~9% volume CAGR over FY2011–13E, leading to a ~13% revenue CAGR. At `1,178, Maruti is trading at 13.1x and 11.6x its FY2012E and FY2013E earnings, respectively. We continue to maintain our Accumulate recommendation on the stock with a target price of `1,322, valuing it at 13x FY2013E earnings.

Stock Market Flash on Bajaj Auto for 1QFY2012.

Y/E March (` cr)	1QFY12	1QFY11	% chg (yoy)	Angel Est	% diff
Net Sales (incl. oth. opr. inc.)	4,777	3,890	22.8	4,913	(2.8)
EBITDA	911	777	17.2	972	(6.3)
EBITDA margin (%)	19.1	20.0	(91)bps	19.8	(71)bps
Reported PAT	711	590	20.5	734	(3.1)

Source: Company, Angel Research

Review

·         Lower than expected top-line performance – Bajaj Auto (BAL) reported slightly lower than expected top-line growth of 22.8% yoy (13.7% qoq)  to  `4,777cr driven by 17.7% yoy (15.3% qoq) jump in volumes. The variance in the top-line growth from our expectation was due to lower average net realizations which declined by 1.8% qoq despite price hikes of ~2% taken during the quarter. On a yoy basis however, average net realizations grew by 4.3% to `41,973. Among the product-mix, Pulsar and Discover contributed ~65% of motor-cycle sales during 1QFY2012. BAL’s export revenue recorded a strong ~40% yoy growth during the quarter to `1,688cr owing to 31.9% yoy increase in exports volumes. Other operating income too posted a robust 24.6% yoy growth to `190cr aiding the top-line performance.

·         Operating performance hit by raw-material cost pressures – BAL’s EBITDA margins for 1QFY2012 came in 71bp below our estimate at 19.1% registering a fall of 91bp yoy (145bp qoq). This was as a result of increase in raw material costs which increased by 150bp yoy (210bp qoq). However, decline in staff cost and other expenditure restricted further contraction in EBITDA margins to a certain extent. Overall, operating profit during the quarter witnessed a 17.2% yoy (5.7% qoq) growth to `911cr.

·         Net Profit up 20.5% yoy and 5.2% qoq – The company reported marginally lower than expected net profit growth of 20.5% yoy (5.2% qoq) to `711cr against our estimate of `734cr, largely because of lower than expected operating performance. Further, the bottom-line performance was also aided by lower than expected tax outgo.  

Outlook

At current levels, the stock is trading at 12.9x FY2013E earnings of `110. We shall update our estimates and release a detailed result update post the earnings conference call with management.

Volume Performance: 1QFY2012

Y/E March (unit)	1QFY12	1QFY11	% chg	FY2011	FY2010	% chg
Total Volume	1,092,815	928,336	17.7	3,823,954	2,851,518	34.1
Motorcycles	963,051	828,418	16.3	3,387,043	2,506,845	35.1
Scooters	-	-	-	27	3,737	-
Total 2 Wheelers	963,051	828,418	16.3	3,387,070	2,510,582	34.9
Three Wheelers	129,764	99,918	29.9	436,884	340,936	28.1
Exports (Inc Above )	427,364	323,899	31.9	1,203,718	890,006	35.2

Source: Company, Angel Research

Standalone Performance: 1QFY2012

Y/E March (` cr)	1QFY12	1QFY11	% chg	FY2011	FY2010	% chg
Net Sales (include Other Op. Inc.)	4,777	3,890	22.8	16,609	11,921	39.3
Consumption of RM	3,290	2,643	24.5	11,230	7,651	46.8
(% of Sales)	68.9	67.9		67.6	64.2
Staff Costs	139	126	9.9	477	399	19.4
(% of Sales)	2.9	3.2		2.9	3.4
Purchases of TG	176	125	40.9	568	420	35.4
(% of Sales)	3.7	3.2		3.4	3.5
Other Expenses	261	219	19.5	948	859	10.5
(% of Sales)	5.5	5.6		5.7	7.2
Total Expenditure	3,866	3,113	24.2	13,224	9,328	41.8
Operating Profit	911	777	17.2	3,385	2,593	30.6
OPM	19.1	20.0		20.4	21.7
Interest	0	1	-	2	6	(71.7)
Depreciation	31	32	(3.7)	123	136	(10.0)
Other Income	73	82	(10.5)	366	123	198.6
PBT (excl. Extr. Items)	953	826	15.4	3,626	2,573	41.0
Extr. Income/(Expense)	-	-	-	(725)	162	-
PBT (incl. Extr. Items)	953	826	15.4	4,351	2,411	80.4
(% of Sales)	19.9	21.2		26.2	20.2
Provision for Taxation	242	236	2.5	1,011	708	42.9
(% of PBT)	25.4	28.6		23.2	29.3
PAT	711	590	20.5	3,340	1,704	96.0
PATM	14.9	15.2		20.1	14.3
Equity capital (cr)	289.4	289.4		289.4	144.7
EPS (`)	24.6	20.4	20.5	115.4	58.9	96.0

Source: Company, Angel Research

Key Financials

Y/E March (`Cr)	FY2010	FY2011	FY2012E	FY2013E
Net sales	11,921	16,609	19,743	22,737
% chg	35.3	39.3	18.9	15.2
Adj. net profit	1,784	2,750	2,871	3,183
% chg	132.0	54.1	4.4	10.9
OPM (%)	20.2	19.7	19.2	19.3
Adj. EPS (`)	61.7	95.0	99.2	110.0
P/E (x)	24.0	14.9	14.3	12.9
P/BV (x)	14.0	8.3	6.7	5.3
RoE (%)	74.4	70.2	52.2	46.0
RoCE (%)	58.8	66.2	63.2	59.3
EV/Sales (x)	3.1	2.1	1.7	1.4
EV/EBITDA (x)	15.9	10.9	9.1	7.5

  

 

Source: Company, Angel Research