Federal Bank reported a 3.3% year-over-year decline in net profit to Rs132cr for the first quarter of fiscal year 2011, lower than estimates due to lower non-interest income and higher provisions. Asset quality pressures emerged as gross and net NPAs increased substantially from the previous quarter. Advances and deposits growth of 16.6% and 10.2% respectively lagged industry averages. CASA deposits grew faster than overall deposits. The bank maintained an Accumulate rating based on attractive valuation and strong core returns, though earnings quality faced pressure from rising NPAs.
Axis Bank has announced its 1QFY2011 results. Net profit grew 32.0% to Rs742cr, better than estimates due to higher than expected net interest income. Advances grew robustly by 39.1% year-over-year driven by corporate lending. Deposits also increased strongly by 33.8% year-over-year. While net interest margins declined, operating performance was strong with stable asset quality. The analyst maintains an 'Accumulate' rating and target price of Rs1,477, implying 10% upside.
Corporation Bank reported a 27.8% increase in net profit for the first quarter of fiscal year 2011 compared to the same period last year, above analysts' estimates. Net interest income grew 49.2% driven by strong loan growth and an improvement in the credit-deposit ratio. However, asset quality deteriorated with gross NPAs rising 11.6% sequentially. Going forward, maintaining the loan growth rate will be challenging in a rising interest rate environment given the bank's regional operations and lower CASA ratio compared to peers.
Dena Bank reported a 20.7% increase in net profit for the first quarter of fiscal year 2011 compared to the same period the previous year, ahead of analyst estimates. Net interest income grew 43.9% year-over-year due to higher loan growth, especially in retail, SME, and agriculture loans. However, gross non-performing assets also increased sequentially. The bank maintained a strong capital adequacy ratio of 11.8% and expects the ratio to increase further with an expected capital infusion of Rs. 600 crore from the government. The analyst maintains a "Buy" rating on the stock with a target price of Rs. 114 based on expected earnings growth and an appropriate price-to-book
Corporation Bank reported a 19.9% rise in net profit to Rs312cr for 4QFY2010, ahead of expectations. Advances grew strongly by 30.3% to Rs63,203cr due to robust deposit growth in 3QFY2010. Asset quality improved with the gross NPA ratio declining to 1% and the provision coverage ratio rising to 70%. While core fee income growth was robust, overall non-interest income declined due to lower treasury gains. Going forward, maintaining the growth rate will be challenging in a rising interest rate environment given the bank's regional operations.
- Axis Bank reported a 38.3% year-over-year increase in net profit to Rs. 735 crore for 2QFY2011, slightly better than the analyst's estimate of Rs. 706 crore.
- Strong operating performance continued as advances grew 36.5% year-over-year and deposits increased 35.7% year-over-year. Net interest income increased 40.5% year-over-year.
- Asset quality was stable with gross and net NPA ratios of 1.1% and 0.3% respectively. The analyst maintains an "Accumulate" recommendation on Axis Bank.
HDFC Bank reported a 33.9% year-on-year increase in net profit to Rs. 812 crore for the first quarter of FY2011, which was close to analyst estimates. Key highlights included a 40.2% rise in loan advances and an improvement in asset quality. The bank saw robust growth across parameters such as net interest income, deposits, and CASA ratio. While recommending a 'Buy' rating, analysts believe HDFC Bank is well positioned for continued high quality growth driven by its expansion plans and improving economic conditions.
Yes Bank reported a 56.3% year-over-year increase in net profit for the first quarter of fiscal year 2011. Net profit was Rs. 156 crore, higher than the estimated Rs. 139 crore due to lower loan loss provisions. Strong loan and deposit growth continued, with advances up 18.3% quarter-over-quarter and deposits up 12.8% quarter-over-quarter. However, branch expansion remained behind schedule. The analyst maintains a Neutral rating on the stock due to high execution risks in achieving growth implied by current valuations, rising funding costs, and challenges in building a retail franchise.
ICICI Bank's net profit increased by 35.2% year-over-year, in line with estimates. Key positives were a further improvement in CASA ratio to 41.7% and declining retail loan slippages for four consecutive quarters. However, balance sheet and network growth were lower than expected. With a capital adequacy of 19.4%, the bank is well-positioned for growth, though branch expansion plans seem slower than anticipated. The stock remains attractive at current levels, leading analysts to maintain a 'Buy' rating.
Axis Bank has announced its 1QFY2011 results. Net profit grew 32.0% to Rs742cr, better than estimates due to higher than expected net interest income. Advances grew robustly by 39.1% year-over-year driven by corporate lending. Deposits also increased strongly by 33.8% year-over-year. While net interest margins declined, operating performance was strong with stable asset quality. The analyst maintains an 'Accumulate' rating and target price of Rs1,477, implying 10% upside.
Corporation Bank reported a 27.8% increase in net profit for the first quarter of fiscal year 2011 compared to the same period last year, above analysts' estimates. Net interest income grew 49.2% driven by strong loan growth and an improvement in the credit-deposit ratio. However, asset quality deteriorated with gross NPAs rising 11.6% sequentially. Going forward, maintaining the loan growth rate will be challenging in a rising interest rate environment given the bank's regional operations and lower CASA ratio compared to peers.
Dena Bank reported a 20.7% increase in net profit for the first quarter of fiscal year 2011 compared to the same period the previous year, ahead of analyst estimates. Net interest income grew 43.9% year-over-year due to higher loan growth, especially in retail, SME, and agriculture loans. However, gross non-performing assets also increased sequentially. The bank maintained a strong capital adequacy ratio of 11.8% and expects the ratio to increase further with an expected capital infusion of Rs. 600 crore from the government. The analyst maintains a "Buy" rating on the stock with a target price of Rs. 114 based on expected earnings growth and an appropriate price-to-book
Corporation Bank reported a 19.9% rise in net profit to Rs312cr for 4QFY2010, ahead of expectations. Advances grew strongly by 30.3% to Rs63,203cr due to robust deposit growth in 3QFY2010. Asset quality improved with the gross NPA ratio declining to 1% and the provision coverage ratio rising to 70%. While core fee income growth was robust, overall non-interest income declined due to lower treasury gains. Going forward, maintaining the growth rate will be challenging in a rising interest rate environment given the bank's regional operations.
- Axis Bank reported a 38.3% year-over-year increase in net profit to Rs. 735 crore for 2QFY2011, slightly better than the analyst's estimate of Rs. 706 crore.
- Strong operating performance continued as advances grew 36.5% year-over-year and deposits increased 35.7% year-over-year. Net interest income increased 40.5% year-over-year.
- Asset quality was stable with gross and net NPA ratios of 1.1% and 0.3% respectively. The analyst maintains an "Accumulate" recommendation on Axis Bank.
HDFC Bank reported a 33.9% year-on-year increase in net profit to Rs. 812 crore for the first quarter of FY2011, which was close to analyst estimates. Key highlights included a 40.2% rise in loan advances and an improvement in asset quality. The bank saw robust growth across parameters such as net interest income, deposits, and CASA ratio. While recommending a 'Buy' rating, analysts believe HDFC Bank is well positioned for continued high quality growth driven by its expansion plans and improving economic conditions.
Yes Bank reported a 56.3% year-over-year increase in net profit for the first quarter of fiscal year 2011. Net profit was Rs. 156 crore, higher than the estimated Rs. 139 crore due to lower loan loss provisions. Strong loan and deposit growth continued, with advances up 18.3% quarter-over-quarter and deposits up 12.8% quarter-over-quarter. However, branch expansion remained behind schedule. The analyst maintains a Neutral rating on the stock due to high execution risks in achieving growth implied by current valuations, rising funding costs, and challenges in building a retail franchise.
ICICI Bank's net profit increased by 35.2% year-over-year, in line with estimates. Key positives were a further improvement in CASA ratio to 41.7% and declining retail loan slippages for four consecutive quarters. However, balance sheet and network growth were lower than expected. With a capital adequacy of 19.4%, the bank is well-positioned for growth, though branch expansion plans seem slower than anticipated. The stock remains attractive at current levels, leading analysts to maintain a 'Buy' rating.
Union Bank of India reported a 36% increase in net profit for the first quarter of fiscal year 2011 compared to the same period last year. Key highlights included steady loan growth of 30% year-over-year and improving asset quality with stable gross NPA ratios. However, non-interest income declined by 18% year-over-year due to lower treasury gains and fee income. Operating expenses grew 36% year-over-year driven by a 45% rise in employee costs. Overall, the results were better than estimates due to lower provisioning expenses.
Indian Overseas Bank reported a net profit decline of 33.6% year-over-year but a rise of 57.2% quarter-over-quarter to Rs200cr for 1QFY2011, above estimates. While advances grew 7.9% year-over-year, deposits increased 8.6% year-over-year. Asset quality pressures eased with gross and net NPA ratios improving, and provisions declining sharply. However, non-interest income declined due to muted loan growth and treasury gains. Operating expenses rose 15.2% year-over-year.
Larsen & Toubro (L&T) reported modest results for the first quarter of fiscal year 2011 that were below analyst expectations on revenue but positively surprised on margins. Revenue grew 6.4% year-over-year to Rs. 7,885 crore, below estimates, due to flat performance in the engineering and construction segment. However, operating margins expanded significantly by 170 basis points due to lower subcontracting costs. The order backlog remained strong at Rs. 1,07,816 crore as of June 30, 2010 and order inflows were led by the power segment. While most positives are priced into the stock, further upside could come from value unlocking at subsidiary levels.
Axis Bank reported a 27.0% year-over-year increase in net profit to Rs. 942 crore for the first quarter of fiscal year 2012, in line with analyst estimates. Business growth momentum slowed as advances declined 7.4% quarter-over-quarter and deposits fell 3.0% quarter-over-quarter, moderating the bank's cash-deposit ratio to 40.5% from 41.1% last quarter. However, asset quality remained healthy with slippage ratio declining to 0.8% and gross and net NPA ratios stable.
ICICI Bank reported a 16.8% year-over-year increase in net profit for the first quarter of fiscal year 2011, which was in line with analyst estimates. While advances increased 1.8% quarter-over-quarter, they declined 6.9% year-over-year due to repayments in retail and short-term corporate loans. Non-performing assets stabilized with a declining trend in retail loan slippages. The bank maintained a strong capital adequacy ratio of 20.2% with a substantial Tier-1 component of 14.0%, positioning it well for growth.
Axis Bank reported strong net profit growth of 31.5% year-over-year, ahead of expectations, driven by lower provisions for non-performing assets. Core business growth was robust, with advances and deposits growing by 27.9% and 20.4% respectively. Additionally, the bank saw sequential improvement in its CASA ratio and reasonable non-interest income growth. The analyst maintains a 'Buy' rating on the stock with a target price implying 18% upside.
CESC reported a 33.7% year-over-year growth in revenue for the first quarter of fiscal year 2011, driven by the commissioning of its new 250MW Budge-Budge power plant. However, operating margins declined from the previous quarter due to a 90.6% year-over-year increase in other expenses. While revenue beat estimates, net profit growth was moderate at 4.8% year-over-year due to higher expenditure, growing at a faster pace than revenues. The company continues construction on its 600MW Chandrapur and Haldia power projects.
Steel Authority of India reported a 1.7% decline in EBITDA to Rs. 1,843 cr for the first quarter of FY2011, below Angel Research's estimate, due to lower sales volume and higher staff costs. Net profit declined 11.3% to Rs. 1,177 cr for the same reasons. While steel prices increased, sales volume fell 15.5% from a year ago. Staff costs rose sharply due to additional provisions for employee benefits. Going forward, the company is expected to benefit from strong domestic demand, but capacity expansion benefits will only be seen after FY2012. Angel Research maintains a Neutral rating on the stock.
GIPCL posted a 23.1% year-over-year increase in net profit to Rs36cr for the fourth quarter of fiscal year 2010, in line with estimates. The growth was aided by a 15.5% decline in fuel costs due to increased gas availability and lower interest and tax expenses. While net sales declined 12.4% to Rs254cr, operating profit fell 13.3% to Rs62cr. The company maintained its expansion plans and guidance. At a share price of Rs110, GIPCL is trading at an attractive valuation compared to its peers.
Simplex Infrastructures posted lackluster 1QFY2011 results with 5.8% revenue growth and operating margins of 10.4%, below analyst expectations. The company's order backlog remains robust at Rs.12,262 crore. While the results were disappointing, the company maintains guidance of 15-20% revenue growth for FY2011. The analyst maintains a Buy rating due to Simplex's diversified order backlog and comfortable balance sheet to fund investments, but lowers the target price to Rs.573 based on a lower forward P/E multiple.
Dena Bank reported net profit growth of 23.3% for the fourth quarter of 2010, ahead of estimates, driven by higher-than-expected net interest margins and higher non-interest income from recoveries. The bank's asset quality remained stable in the quarter and it expects capital infusion of Rs600 crore in the first quarter of 2011. The analyst maintains a buy rating on the stock with a target price of Rs98, citing expected advances growth of 17% and earnings growth of 16% over the next few years.
National Aluminium reported a 47.3% year-over-year increase in net revenue to Rs. 1,604 crore for the fourth quarter of fiscal year 2010, exceeding estimates. EBITDA margins expanded substantially by 2,496 basis points year-over-year to 33.7% due to lower raw material, power, and staff costs. As a result, net profit increased 371.5% year-over-year and 152.3% quarter-over-quarter to Rs. 392 crore. However, the analyst maintains a "Sell" rating due to rich valuations compared to peers.
GIPCL reported a 42.3% year-over-year increase in net profit to Rs42cr for the first quarter of fiscal year 2011, despite flat revenues. The bottom line growth was driven by lower tax expenses from tax refunds received for prior years. Operating profit grew 3.3% to Rs64cr on better realizations. The company maintains a buy rating with a target price of Rs135, expecting revenue and profit to grow at a CAGR of 32.5% and 28.3% through fiscal year 2012 driven by new plant capacity additions.
Yes Bank reported strong loan and deposit growth in 4QFY2010, with loans up 18.6% sequentially and deposits up 21.6%. This fueled a 15.8% sequential rise in net interest income. However, the analyst maintains a neutral outlook due to expensive valuation multiples that require high execution of growth plans, especially in retail banking.
Jyoti Structures reported a 20.3% year-over-year growth in net profit to Rs. 25 crores for the fourth quarter of FY2010, slightly below estimates. Operating margins expanded more than expected by 235 basis points to 12.8% due to lower raw material costs. For the full year, net profit grew 15.3% to Rs. 92 crores on sales of Rs. 2,006 crores. The company maintained its buy recommendation with a target price of Rs. 215, citing the large investments planned for power transmission and the company's position as a top player in the industry.
- Blue Star reported a 22.6% year-over-year increase in quarterly revenue to Rs875 crore, slightly ahead of estimates. Operating margins were in line with estimates at 12.8%.
- The company has shifted its strategic focus from IT/ITeS and retail segments to hospital, hotel, and infrastructure segments, which have longer execution periods.
- Order inflows increased 43% year-over-year to Rs704 crore for the quarter, indicating an improved outlook. The analyst maintains an "Accumulate" rating with a target price of Rs425.
Hindustan Construction Company (HCC) reported a 10.8% increase in net sales for the fourth quarter of fiscal year 2010, in line with estimates. However, operating margins of 11.3% disappointed due to four projects not reaching revenue recognition thresholds. While interest costs decreased by 31.8% year-over-year, net profit declined 16.3% due to lower operating margins. The analyst maintains a neutral outlook on HCC stock due to trimmed earnings estimates for fiscal years 2011-2012 but sees potential upside from the planned listing of HCC's Lavasa subsidiary.
Inox Leisure posted strong revenue growth in the fourth quarter aided by seat additions and a big budget movie lineup. However, higher expenses and film distribution shares led to a decline in operating margins. While profits grew on a recurring basis, margins contracted. The analyst maintains a 'Buy' rating, seeing upside from the Fame India acquisition, but lowers earnings estimates to account for higher interest costs.
Sterlite Industries reported lower than expected results for the first quarter of fiscal year 2011. Net revenue grew 30.6% year-over-year to Rs5,925 crore, below Angel Research estimates, due to lower production from planned maintenance shutdowns and resource issues. EBITDA grew 48.3% to Rs1,452 crore but margins expanded less than expected. Net profit increased 49.9% to Rs1,008 crore, also below estimates. Segment performance was mixed, with copper improving but aluminum declining due to cost pressures. The results were impacted by higher costs and lower production than anticipated.
The document provides a daily market summary of the Nifty Sensex stocks in India on April 19, 2010. Key points include:
1) The markets opened lower and traded in a narrow range throughout the day, closing in the red.
2) Titan, FinanTech, and IBREALEST were the top 3 gainers, while PRAJ INDS, BALRAM CHIN, and ROLTA were the top 3 losers.
3) CD, CG, and PSU sectors saw losses for the day, while other sectors like FMCG saw small gains.
- Markets in India were largely flat for the week, with the Sensex up 0.2% and Nifty up 0.1%. Mid and small cap indices outperformed large caps.
- The BSE Oil & Gas index gained 2.7% led by a 3.9% gain in Reliance Industries, which makes up 58.8% of the index. Other oil marketing companies like HPCL and BPCL also witnessed gains.
- Aurobindo Pharma is initiated with a Buy rating and target price of Rs. 1,330 based on an SOTP valuation. The company has transformed from a low margin API player to a high margin formulations player, and its financial metrics are
The document summarizes the performance of Indian stock market indices on June 24, 2010. It notes that market volatility was high as traders rolled over positions in the derivatives segment, though the market recovered from an initial slide and closed marginally higher. Several indices such as BSE mid-cap and small-cap closed up 0.8% and 0.7% respectively. Top gainers included Amtek Auto and Anant Raj, while top losers included L&T and Indus Ind. The document provides an outlook for the next day's market and notes recent news about companies such as Sun TV Network and Concor.
Union Bank of India reported a 36% increase in net profit for the first quarter of fiscal year 2011 compared to the same period last year. Key highlights included steady loan growth of 30% year-over-year and improving asset quality with stable gross NPA ratios. However, non-interest income declined by 18% year-over-year due to lower treasury gains and fee income. Operating expenses grew 36% year-over-year driven by a 45% rise in employee costs. Overall, the results were better than estimates due to lower provisioning expenses.
Indian Overseas Bank reported a net profit decline of 33.6% year-over-year but a rise of 57.2% quarter-over-quarter to Rs200cr for 1QFY2011, above estimates. While advances grew 7.9% year-over-year, deposits increased 8.6% year-over-year. Asset quality pressures eased with gross and net NPA ratios improving, and provisions declining sharply. However, non-interest income declined due to muted loan growth and treasury gains. Operating expenses rose 15.2% year-over-year.
Larsen & Toubro (L&T) reported modest results for the first quarter of fiscal year 2011 that were below analyst expectations on revenue but positively surprised on margins. Revenue grew 6.4% year-over-year to Rs. 7,885 crore, below estimates, due to flat performance in the engineering and construction segment. However, operating margins expanded significantly by 170 basis points due to lower subcontracting costs. The order backlog remained strong at Rs. 1,07,816 crore as of June 30, 2010 and order inflows were led by the power segment. While most positives are priced into the stock, further upside could come from value unlocking at subsidiary levels.
Axis Bank reported a 27.0% year-over-year increase in net profit to Rs. 942 crore for the first quarter of fiscal year 2012, in line with analyst estimates. Business growth momentum slowed as advances declined 7.4% quarter-over-quarter and deposits fell 3.0% quarter-over-quarter, moderating the bank's cash-deposit ratio to 40.5% from 41.1% last quarter. However, asset quality remained healthy with slippage ratio declining to 0.8% and gross and net NPA ratios stable.
ICICI Bank reported a 16.8% year-over-year increase in net profit for the first quarter of fiscal year 2011, which was in line with analyst estimates. While advances increased 1.8% quarter-over-quarter, they declined 6.9% year-over-year due to repayments in retail and short-term corporate loans. Non-performing assets stabilized with a declining trend in retail loan slippages. The bank maintained a strong capital adequacy ratio of 20.2% with a substantial Tier-1 component of 14.0%, positioning it well for growth.
Axis Bank reported strong net profit growth of 31.5% year-over-year, ahead of expectations, driven by lower provisions for non-performing assets. Core business growth was robust, with advances and deposits growing by 27.9% and 20.4% respectively. Additionally, the bank saw sequential improvement in its CASA ratio and reasonable non-interest income growth. The analyst maintains a 'Buy' rating on the stock with a target price implying 18% upside.
CESC reported a 33.7% year-over-year growth in revenue for the first quarter of fiscal year 2011, driven by the commissioning of its new 250MW Budge-Budge power plant. However, operating margins declined from the previous quarter due to a 90.6% year-over-year increase in other expenses. While revenue beat estimates, net profit growth was moderate at 4.8% year-over-year due to higher expenditure, growing at a faster pace than revenues. The company continues construction on its 600MW Chandrapur and Haldia power projects.
Steel Authority of India reported a 1.7% decline in EBITDA to Rs. 1,843 cr for the first quarter of FY2011, below Angel Research's estimate, due to lower sales volume and higher staff costs. Net profit declined 11.3% to Rs. 1,177 cr for the same reasons. While steel prices increased, sales volume fell 15.5% from a year ago. Staff costs rose sharply due to additional provisions for employee benefits. Going forward, the company is expected to benefit from strong domestic demand, but capacity expansion benefits will only be seen after FY2012. Angel Research maintains a Neutral rating on the stock.
GIPCL posted a 23.1% year-over-year increase in net profit to Rs36cr for the fourth quarter of fiscal year 2010, in line with estimates. The growth was aided by a 15.5% decline in fuel costs due to increased gas availability and lower interest and tax expenses. While net sales declined 12.4% to Rs254cr, operating profit fell 13.3% to Rs62cr. The company maintained its expansion plans and guidance. At a share price of Rs110, GIPCL is trading at an attractive valuation compared to its peers.
Simplex Infrastructures posted lackluster 1QFY2011 results with 5.8% revenue growth and operating margins of 10.4%, below analyst expectations. The company's order backlog remains robust at Rs.12,262 crore. While the results were disappointing, the company maintains guidance of 15-20% revenue growth for FY2011. The analyst maintains a Buy rating due to Simplex's diversified order backlog and comfortable balance sheet to fund investments, but lowers the target price to Rs.573 based on a lower forward P/E multiple.
Dena Bank reported net profit growth of 23.3% for the fourth quarter of 2010, ahead of estimates, driven by higher-than-expected net interest margins and higher non-interest income from recoveries. The bank's asset quality remained stable in the quarter and it expects capital infusion of Rs600 crore in the first quarter of 2011. The analyst maintains a buy rating on the stock with a target price of Rs98, citing expected advances growth of 17% and earnings growth of 16% over the next few years.
National Aluminium reported a 47.3% year-over-year increase in net revenue to Rs. 1,604 crore for the fourth quarter of fiscal year 2010, exceeding estimates. EBITDA margins expanded substantially by 2,496 basis points year-over-year to 33.7% due to lower raw material, power, and staff costs. As a result, net profit increased 371.5% year-over-year and 152.3% quarter-over-quarter to Rs. 392 crore. However, the analyst maintains a "Sell" rating due to rich valuations compared to peers.
GIPCL reported a 42.3% year-over-year increase in net profit to Rs42cr for the first quarter of fiscal year 2011, despite flat revenues. The bottom line growth was driven by lower tax expenses from tax refunds received for prior years. Operating profit grew 3.3% to Rs64cr on better realizations. The company maintains a buy rating with a target price of Rs135, expecting revenue and profit to grow at a CAGR of 32.5% and 28.3% through fiscal year 2012 driven by new plant capacity additions.
Yes Bank reported strong loan and deposit growth in 4QFY2010, with loans up 18.6% sequentially and deposits up 21.6%. This fueled a 15.8% sequential rise in net interest income. However, the analyst maintains a neutral outlook due to expensive valuation multiples that require high execution of growth plans, especially in retail banking.
Jyoti Structures reported a 20.3% year-over-year growth in net profit to Rs. 25 crores for the fourth quarter of FY2010, slightly below estimates. Operating margins expanded more than expected by 235 basis points to 12.8% due to lower raw material costs. For the full year, net profit grew 15.3% to Rs. 92 crores on sales of Rs. 2,006 crores. The company maintained its buy recommendation with a target price of Rs. 215, citing the large investments planned for power transmission and the company's position as a top player in the industry.
- Blue Star reported a 22.6% year-over-year increase in quarterly revenue to Rs875 crore, slightly ahead of estimates. Operating margins were in line with estimates at 12.8%.
- The company has shifted its strategic focus from IT/ITeS and retail segments to hospital, hotel, and infrastructure segments, which have longer execution periods.
- Order inflows increased 43% year-over-year to Rs704 crore for the quarter, indicating an improved outlook. The analyst maintains an "Accumulate" rating with a target price of Rs425.
Hindustan Construction Company (HCC) reported a 10.8% increase in net sales for the fourth quarter of fiscal year 2010, in line with estimates. However, operating margins of 11.3% disappointed due to four projects not reaching revenue recognition thresholds. While interest costs decreased by 31.8% year-over-year, net profit declined 16.3% due to lower operating margins. The analyst maintains a neutral outlook on HCC stock due to trimmed earnings estimates for fiscal years 2011-2012 but sees potential upside from the planned listing of HCC's Lavasa subsidiary.
Inox Leisure posted strong revenue growth in the fourth quarter aided by seat additions and a big budget movie lineup. However, higher expenses and film distribution shares led to a decline in operating margins. While profits grew on a recurring basis, margins contracted. The analyst maintains a 'Buy' rating, seeing upside from the Fame India acquisition, but lowers earnings estimates to account for higher interest costs.
Sterlite Industries reported lower than expected results for the first quarter of fiscal year 2011. Net revenue grew 30.6% year-over-year to Rs5,925 crore, below Angel Research estimates, due to lower production from planned maintenance shutdowns and resource issues. EBITDA grew 48.3% to Rs1,452 crore but margins expanded less than expected. Net profit increased 49.9% to Rs1,008 crore, also below estimates. Segment performance was mixed, with copper improving but aluminum declining due to cost pressures. The results were impacted by higher costs and lower production than anticipated.
The document provides a daily market summary of the Nifty Sensex stocks in India on April 19, 2010. Key points include:
1) The markets opened lower and traded in a narrow range throughout the day, closing in the red.
2) Titan, FinanTech, and IBREALEST were the top 3 gainers, while PRAJ INDS, BALRAM CHIN, and ROLTA were the top 3 losers.
3) CD, CG, and PSU sectors saw losses for the day, while other sectors like FMCG saw small gains.
- Markets in India were largely flat for the week, with the Sensex up 0.2% and Nifty up 0.1%. Mid and small cap indices outperformed large caps.
- The BSE Oil & Gas index gained 2.7% led by a 3.9% gain in Reliance Industries, which makes up 58.8% of the index. Other oil marketing companies like HPCL and BPCL also witnessed gains.
- Aurobindo Pharma is initiated with a Buy rating and target price of Rs. 1,330 based on an SOTP valuation. The company has transformed from a low margin API player to a high margin formulations player, and its financial metrics are
The document summarizes the performance of Indian stock market indices on June 24, 2010. It notes that market volatility was high as traders rolled over positions in the derivatives segment, though the market recovered from an initial slide and closed marginally higher. Several indices such as BSE mid-cap and small-cap closed up 0.8% and 0.7% respectively. Top gainers included Amtek Auto and Anant Raj, while top losers included L&T and Indus Ind. The document provides an outlook for the next day's market and notes recent news about companies such as Sun TV Network and Concor.
Lupin reported in-line results for the first quarter of fiscal year 2011, with net sales of Rs1,312 crore, operating profit margin of 20%, and net profit of Rs196 crore. Key drivers of growth included strong sales of generic drugs in the US market, as well as expansion of Lupin's domestic field force in India. While the company saw a delay in FDA approval for oral contraceptive drugs, management does not expect this to impact its competitive position. The analyst maintains an 'Accumulate' rating for Lupin based on its scale in key markets like the US and India, as well as its pipeline of generic drug approvals.
The document provides a summary of derivative market activity in India for August 16, 2010. Key points include:
- Open interest in Nifty futures increased 1.36% while Mini Nifty futures increased 13.13% as the market closed at 5452.10.
- Nifty August futures closed at a premium of 4.35 points and September futures closed at a premium of 11.60 points.
- Put-call ratio for the overall market increased to 1.49 from 1.45. Implied volatility of at-the-money options decreased to 14% from 15.5%.
- Total open interest in the market was Rs. 1,70,237cr with stock futures open interest at
Dabur reported a mixed set of results for the first quarter of fiscal year 2011. While revenue growth was strong at 23% due to a record 20% increase in volume, earnings growth disappointed at 17% due to margin contraction and higher taxes. Revenue was boosted by double-digit growth in consumer care division categories like oral care, health supplements, and home care. However, earnings fell short of estimates due to a rise in advertising spending squeezing margins. The company also announced an acquisition and a bonus share issue.
- The key Indian stock market indices, Nifty and Sensex, saw minor declines of 0.23% and 0.26% respectively at market close. The top gainers were IDFC, HINDUNILVR, and HEROHONDA, while the top losers were RELCAPITAL, RPOWER, and RCOM. Most sectors saw declines with the exception of the consumer goods sector, which saw a gain of 0.62%.
- In the coming week, markets are expected to see volatility due to upcoming derivative contract expiries. Technical indicators suggest the possibility of a minor pullback after recent gains. Support levels for the indices are seen at 17,278-17,141 for Sensex and 5
The market indices in India declined slightly on the day, with the Sensex and Nifty losing 0.5% and 0.6% respectively. Several sectors such as realty, FMCG and metals declined, while TCS and Infosys gained slightly. The document then provides analysis of quarterly earnings results for several companies such as Wipro, Bank of India, Dr. Reddy's Labs, and Indian Bank. It also previews upcoming quarterly results and provides other stock recommendations and analysis.
The document provides a summary of derivative market activity in India for August 19, 2010. It notes that open interest for Nifty futures increased 2.14% while Minifutures increased 26.29%. The Nifty August future closed at a premium of 3.90 points. Put-call ratios for Nifty increased to 1.57. Implied volatility of at-the-money options decreased. Total open interest in the market was Rs. 1,80,788 crore with stock futures open interest at Rs. 50,692 crore. FIIs were net buyers of Rs. 675 crore in the cash market.
The market indices opened marginally lower but closed higher. Top gainers were Maruti, Unitech and Sun Pharma, while top losers were LT, HCL Tech and Sterlite. The realty and healthcare sectors saw gains while capital goods saw losses. Stocks like Maruti and Essar Oil are positively biased for the next 2-3 days, while technical indicators suggest the market may consolidate at current levels or see a slight decline. Pivot points are provided for various stocks.
Deccan Chronicle Holdings (DCHL) reported a 7% year-over-year increase in revenue and an 18.4% increase in profits for the first quarter of fiscal year 2011. Revenue was in line with expectations at Rs231.8 crore, driven by a 7% increase in advertising revenue. Profits increased due to a 281 basis point expansion in operating margins and a lower effective tax rate of 14%. The company continued to benefit from low newsprint prices. While advertising revenue growth was driven by higher rates, management expects advertising volumes to recover going forward. DCHL maintained its buy rating based on attractive valuations and growth prospects.
The document provides a summary of derivative market activity in India for June 25, 2010. Key points include:
1) Nifty futures open interest increased 3.42% while Minifity futures decreased 1.62% as the market closed at 5320.60.
2) Several stocks saw significant changes in open interest, both increases like HCLTECH (112%) and decreases like TATAPOWER (-11.23%).
3) The put-call ratio for Nifty futures increased to 1.87 from 1.84. Historical volatility decreased for some stocks.
4) FIIs were net buyers of stocks and index futures but net sellers of index options and stock futures. Total
Standard Chartered is issuing Indian Depository Receipts (IDRs) that will allow Indian investors to invest in the company. The bank stands to benefit from emerging market recovery as Asia accounted for 83% of its profits in 2009. It has a strong presence in growing markets like India, Hong Kong, and Singapore. The bank has superior returns on assets and equity compared to its peers. The IDR issue provides exposure to a globally diversified bank that is well positioned in high-growth emerging markets.
The key points from the document are:
1) Broad selling was seen across almost all sectors, causing the key indices (Nifty and Sensex) to close deep in the red, down around 2.5-3%.
2) Metals and capital goods sectors saw the largest losses of around 5%, while banking and oil & gas sectors lost around 2.5-3%.
3) The technical charts show the indices have tested a lower trendline and a close below key support levels could lead to further declines in the indices. However, a short bounce is also possible given the sharp recent falls.
Bharti Airtel reported a 2.4% year-over-year growth in net revenue for 4QFY2010 due to strong growth in its tower business and other businesses, although its mobile business revenue declined slightly. While the company's mobile subscriber base grew 35.9% year-over-year, revenue per user declined significantly due to competitive pressures. Higher selling, general and administrative expenses eroded operating margins, and combined with higher taxes and depreciation expenses, net income declined 8.2% year-over-year despite total minutes of usage growing by 12.8%. Going forward, the company expects continued strong subscriber addition but declining revenue per minute, which will impact profitability.
Ambuja Cements reported a 52.2% year-over-year decline in net profit for the third quarter of 2010 due to lower sales realizations and higher raw material and power costs. However, despatches increased 6.1% year-over-year. Going forward, analysts expect capacity additions to drive higher volume growth but margins may remain under pressure due to increasing costs. At current price levels, the stock is considered fairly valued based on estimated future earnings and operating metrics.
The derivative report provides an analysis of the movement in Nifty futures, open interest levels, and key option statistics from August 6, 2010. Open interest in Nifty futures increased by 1.45% while premium levels changed. The put-call ratio rose and implied volatility remained the same. Certain stocks saw large increases or decreases in open interest. Analysis is also provided on index levels and bullish/bearish option strategies.
SpiceJet is initiating coverage with a buy recommendation and a target price of Rs84, implying 33% upside. SpiceJet is one of the fastest growing airlines in India with a 12% market share. Passenger traffic is expected to grow at 13% annually over the next few years, outpacing low capacity additions of 5-8% annually. This will result in higher load factors and profitability for airlines like SpiceJet. SpiceJet increased its market share from 8% to 12% in the past year and is expected to increase its passenger volume by 44% in the current year due to its low cost model and expansion plans.
PTC India reported a 43.7% rise in net profit for the second quarter of fiscal year 2011 compared to the same period last year. Trading volumes increased 21% year-over-year due to higher power generation and increased quantities traded under long-term contracts. The company maintained its leadership position in power trading but margins were suppressed by lower-margin cross-border and exchange trades. While revenues were flat, operating profit rose 28.3% due to lower employee costs from ESOP reversals. The company expects to maintain its lead in the industry and sees opportunities for growth through new business lines and subsidiaries.
Lakshmi Machine Works reported strong sales and profit growth in the second quarter of fiscal year 2011. Net sales increased 59.8% over the previous year to Rs. 429 crore, while operating profit margin expanded to 14.9% and profit after tax grew 41.7% to Rs. 45.9 crore. The company maintained a robust order backlog of Rs. 3,600 crore which will support continued revenue growth. While second quarter results were slightly below estimates, the outlook for demand from the textile industry remains positive due to high capacity utilization rates.
Punjab National Bank reported flat net profit of Rs1,068cr for 1QFY2011, higher than estimates due to strong growth in net interest income and non-interest income. However, asset quality pressures increased with gross and net NPAs rising significantly. Total advances grew 24.6% year-over-year driven by growth in the agriculture, SME, and corporate segments. Net interest margins declined slightly due to higher cost of deposits outpacing growth in asset yields. The bank increased provisions for NPAs in the quarter and restructured an additional Rs878cr in loans.
Oriental Bank of Commerce reported a 41.1% rise in net profit for the quarter compared to the same period last year. Net interest income grew 118.4% on strong loan growth of 20.3% and deposit growth of 19.8%. Asset quality was stable with gross and net NPA ratios of 1.7% and 0.7% respectively. The bank upgraded its target price for OBC stock to Rs. 409 based on improved near-term net interest margins and asset quality.
1) Indian Bank reported an 11% increase in net profit for 1QFY2011 compared to the previous year, which was above estimates. However, gross NPAs sharply increased.
2) Advances and deposits grew by 31% and 19% respectively year-over-year. Net interest income declined slightly sequentially despite higher interest payments on savings deposits.
3) Going forward, the bank's net interest margins may decline in a rising interest rate environment given its moderate CASA ratio of 33%, and asset quality will need to be monitored in the next two quarters.
South Indian Bank reported net profits of Rs. 58 crore for the first quarter of fiscal year 2011, in line with analyst estimates. Business growth was strong, with advances growing 33.6% year-over-year and deposits growing 25.1% year-over-year. Asset quality remained stable with gross and net NPA ratios of 1.3% and 0.4% respectively. Operating expenses grew 47.1% sequentially but the bank plans to control expenses going forward. The analyst maintains a Neutral rating on the stock as it trades at 6.8 times estimated fiscal year 2012 earnings per share of Rs. 28.5 per share.
State Bank of India reported a 25.1% year-over-year increase in net profit for the first quarter of fiscal year 2011, exceeding analyst estimates. Net interest income grew 45.4% year-over-year due to a rise in low-cost deposits and narrowing of net interest margin. Loan growth was 20.4% year-over-year while deposit growth was 6.8% year-over-year. Non-performing assets rose slightly during the quarter but asset quality remained reasonable with net NPA ratio of 1.7%. The analyst maintains an "Accumulate" rating on the stock.
ICICI Bank reported a 16.8% year-over-year increase in net profit for 1QFY2011, which was in line with analyst estimates. While advances grew 1.8% quarter-over-quarter, they declined 6.9% year-over-year due to repayments in retail and short-term corporate loans. Non-performing assets stabilized with a decline in retail loan slippages, and the provision coverage ratio improved. Operating expenses declined 4% year-over-year, though the cost-to-income ratio rose due to muted revenue growth. The analyst maintains a buy rating on expectations of lower NPA provisions driving higher returns going forward.
ICICI Bank's net profit increased by 35.2% year-over-year, in line with estimates. Key positives were a further improvement in CASA ratio to 41.7% and declining retail loan slippages for four consecutive quarters. However, balance sheet and network growth were lower than expected. With a capital adequacy of 19.4%, the bank is well-positioned for growth. The stock remains attractive at current levels and the analyst maintains a Buy rating.
Indian Bank reported a 4.0% increase in net profit for the year, in line with estimates. While non-performing assets remained stable, restructured accounts upgraded significantly and loan growth was strong. However, high slippages and a relatively lower low-cost deposit ratio may pose challenges. The stock price has risen recently and is now trading at average valuation levels, leading to a neutral recommendation.
Hindalco reported strong results for the first quarter of fiscal year 2011. Revenue grew 29.2% year-over-year to Rs. 2,533 crore, driven by a 12.7% increase in aluminum shipments. Adjusted EBITDA more than doubled to Rs. 263 crore, resulting in adjusted EBITDA margins of 10.4%. However, net profit declined 65% to Rs. 50 crore due to higher interest and tax expenses. Management expects continued growth in demand and benefits from capacity expansions. The stock currently trades at attractive valuations and the analyst maintains a Buy rating with a target price of Rs. 204.
Bank of India reported a 24.1% year-over-year increase in net profit to Rs725 crore for the first quarter of fiscal year 2011, with robust operating performance and lower provisions contributing to earnings growth. Advances grew 19.6% year-over-year while deposits increased 19.8% driven by improved credit demand. Net interest margin expanded to 2.89% from better asset yields and lower funding costs. Asset quality also improved with gross and net NPA ratios declining, though provisions remained high.
Bank of India reported a 24.1% year-over-year increase in net profit to Rs725 crore for the first quarter of fiscal year 2011, with robust loan growth, improved net interest margins, and lower provisions driving results. Advances grew 19.6% year-over-year while deposits increased 19.8% year-over-year. Net interest margins improved to 2.89% from 2.42% in the prior year quarter. Asset quality also improved with gross and net NPA ratios declining.
JP Associates reported a 51.8% year-over-year increase in net sales for the first quarter of FY2011, driven by strong growth in the cement, construction, and real estate verticals. However, operating margins declined significantly from 28% to 21.2% due to margin pressure, resulting in a 57.6% decrease in recurring earnings. While reported profits were up 5% due to exceptional gains, underlying earnings were down. The analyst maintains a buy rating but expects margins to recover, and forecasts JP Associates will become one of the fastest growing conglomerates in cement, power, and real estate.
Bajaj Electricals reported a 19.3% year-over-year increase in quarterly revenue to Rs. 784 crore, slightly ahead of estimates. Revenue growth was driven primarily by the consumer durables division which saw 35.6% growth. However, net profit declined 21.1% to Rs. 37 crore due to additional taxes and a loan write-off. The company maintained a strong order backlog of Rs. 932 crore. While growth outlook remains positive, the analyst maintains a neutral rating given the recent run-up in stock price and expects the stock to trade around 10-12 times estimated earnings.
Subros reported an 11.6% increase in net sales for the first quarter of FY2011 compared to the same period last year, aided by a 13.8% growth in volumes. Operating profit rose 17.3% while net profit jumped 117.1% due to lower raw material costs and expansion in operating margins. The company maintained its outlook for 15% annual volume growth over the next two years but expects pricing pressure to limit revenue growth to around 10% annually. The analyst maintains a 'Buy' rating with a target price of Rs60 per share based on projected earnings growth and reasonable valuation.
TCS reported strong financial results for the 1QFY2011 quarter that exceeded analyst estimates. Revenue grew 6.2% quarter-over-quarter to Rs. 8,217 crore, driven by an 8.1% increase in business volumes. Operating margins declined slightly due to wage increases and currency fluctuations impacting costs. Net profit declined 5.3% due to higher foreign exchange losses and taxes. The analyst maintains a positive outlook due to TCS's strong deal pipeline and hiring growth, but notes concerns around the European economic situation and currency movements. The stock is recommended as an "Accumulate" with a target price of Rs. 920.
HDFC Bank reported strong growth in net profit of 32.7% year-over-year and 12.4% quarter-over-quarter. Gross advances grew 37.7% year-over-year, significantly outpacing industry growth. Deposits also increased substantially by 30.4% year-over-year. Asset quality remained stable with gross NPAs at 1.2% and net NPAs at 0.3%, while the bank maintained a healthy capital adequacy ratio of 17%.
CESC reported a 2.1% year-over-year growth in net sales to Rs770cr in the fourth quarter of fiscal year 2010, aided by a 1.7% increase in sales volume. The company's operating profit margin improved by 409 basis points to 26% during the quarter, helping net profit rise by 6.4% to Rs100cr. For the full fiscal year 2010, CESC's top-line grew by 8% to Rs3,351cr while bottom-line increased 5.6% to Rs433cr. The analyst maintained a "Buy" recommendation on the stock based on its fiscal year 2012 estimated price-to-earnings ratio of 7.4x and price-to-
TVS Motor reported a 41% increase in net sales for the first quarter of fiscal year 2011 compared to the same period last year, driven by a 33% rise in total volumes. However, operating profit was slightly below expectations due to lower-than-expected operating margins. While earnings grew substantially year-over-year due to margin expansion and lower taxes, the report maintains a neutral rating on the stock given its recent price increase. Future performance will depend on consistent volume growth, improved market share, and higher margins.
Nagarjuna Construction Company (NCC) reported disappointing 1QFY2011 results with revenues growing only 8.5% year-over-year, below expectations. Operating margins were in line with estimates at 9.7% however. The company maintained full-year revenue guidance of Rs5,800cr. NCC has a strong order backlog of Rs16,051cr, providing revenue visibility. While results were below estimates, management sees potential in its diversified operations and order backlog. The stock remains undervalued and analysts maintain a "Buy" rating given growth opportunities.
Reliance Industries reported lower-than-expected earnings for 1QFY2011. While net operating income rose 86.7% year-over-year due to growth in refining revenues, EBITDA was below estimates due to lower petrochemical sales volumes and refining margins. Net profit grew 32.3% year-over-year, meeting estimates. The analyst maintains a 'Buy' rating based on the company's growth outlook and believes it is undervalued relative to its peers.
The Indian markets are expected to open higher, tracking gains in most Asian markets. Spain has asked for a bailout of up to €100 billion for its banking system. Chinese exports grew more than expected in May. In India, shares extended gains for a fifth session despite weak global cues as major central banks held off on additional stimulus. The key support and resistance levels for the Nifty are 5,023 and 5,114 respectively. L&T has bagged orders worth Rs. 483 crore to build commercial vessels in Qatar. Vedanta Resources has acquired a 24.5% stake in Raykal Aluminium for Rs. 201 crore.
1) For 1QFY2012, Electrosteel Castings reported 16.4% sales growth but margins declined due to higher raw material costs. EBITDA fell 18.2% and net profit declined 7.2%.
2) While sales volumes grew, costs increased more due to a rise in raw material costs as a percentage of sales.
3) The company maintains a buy recommendation due to initiatives in steelmaking and backward integration that should lower costs starting in FY2013 and valuation remains attractive.
1) For 1QFY2012, Persistent Systems reported revenues of ₹224 crore, up 5.2% over the previous quarter and 23.6% over the same period last year.
2) EBITDA was ₹40 crore, up 5.3% over the previous quarter but margins declined.
3) PAT was ₹28 crore, down 16.8% over the previous quarter due to higher taxes.
4) Management maintained revenue guidance of 29% growth for FY2012 and expects PAT to remain flat despite higher tax rates.
HT Media reported a 22.7% year-over-year increase in revenue to ₹494 crore for the first quarter of FY2012. Revenue was also up 5.8% quarter-over-quarter. Advertising revenue grew 17% year-over-year, with 18% growth in English and 15% growth in Hindi. Operating profit rose 11.8% year-over-year to ₹87.8 crore due to higher other income and lower tax rates, although operating margins contracted by 174 basis points. The company maintained its Accumulate rating based on expectations of continued revenue growth and margin expansion.
The summary is:
1) The derivative report analyzes the performance of the Nifty futures, options, and key stocks from the previous trading session on July 18, 2011.
2) It provides details on changes in open interest, premium levels, volatility, and turnover for various derivatives contracts.
3) Trading strategies and technical analysis is also given for some stocks along with risk-reward profiles of sample spreads trades for the Nifty.
The market ended lower, with the Sensex and Nifty closing down 0.3%. Mid- and small-cap indices closed higher. Select heavyweights like Hindalco Industries and BHEL gained 1-3%, while TCS and Tata Motors lost 1-2%. In corporate news, Motherson Sumi Systems agreed to acquire an 80% stake in Peguform for €141.5 million. HDFC Bank, Cadila Healthcare, Crompton Greaves, and Ashok Leyland are scheduled to announce their quarterly results. The trend for the day will be decided by whether Nifty trades above or below the levels of 18,533/5,572 in early trade.
- GSM subscriber additions in India continued their declining trend in June 2011, with net additions of 9.6 million, down 10% from the previous month.
- All major operators except BSNL reported a drop in subscriber additions. Bharti and Vodafone each added 2.1 million subscribers.
- The total GSM subscriber base reached 598.8 million in June 2011, with Bharti, Vodafone, Idea and BSNL maintaining their major market shares.
The document provides a technical analysis of the Indian stock market indices Sensex and Nifty for the week of July 16, 2011. It summarizes that the indices declined over 1.5% for the week and are currently trading in a range between 18,326/5496 on the downside and 19,132/5740 on the upside. It notes that a break above or below this range would dictate the direction of the upcoming trend. The analysis also lists pivot levels for 50 Nifty stocks to watch in the coming week.
The document provides a summary of derivative market activity in India for July 18, 2011. Key points include:
- Nifty futures open interest increased 0.67% while Mini Nifty increased 3.48% as the market closed at 5581.10
- Nifty July futures closed at a premium of 5.85 points and August futures at a premium of 22.60 points
- Implied volatility of at-the-money options decreased from 18% to 17.3%
- Total open interest in the market was Rs. 135,158 crore with stock futures open interest at Rs. 34,675 crore.
The indices opened flat but traded choppily throughout the day. Metal, auto and realty stocks declined while IT stocks gained. The indices are currently trading in a range between 18,326-18,810/5496-5653 on the downside and 19,132-19,094/5740-5700 on the upside. A break above these resistance levels could lead to further gains while a break below support could result in losses extending to 17,805-17,950/5350-5400. Pivot levels for 50 Nifty stocks are provided.
- The key Indian stock indices declined slightly, with the Sensex and Nifty closing down 0.3%.
- GSM subscriber additions in India continued their declining trend in June across most major operators such as Idea, Bharti Airtel, and Vodafone. Total GSM subscriber addition was 9.6 million, down 10% from the previous month.
- Tata Motors reported flat annual global sales growth in June 2011 compared to the previous year.
- South Indian Bank reported a 41.2% year-over-year increase in net profit to Rs. 82 crores for the first quarter of fiscal year 2012, slightly below analyst estimates.
- Business growth remained strong, with advances growth of 31.2% and deposits growth of 35.5% year-over-year. However, net interest margins compressed by 29 basis points sequentially to 2.8% due to a sharp rise in the bank's cost of deposits.
- Non-interest income was boosted by treasury gains, but fee income growth was modest. Asset quality was stable with gross and net NPAs rising marginally, and provision coverage at a comfortable 73.1%.
Bajaj Auto reported marginally lower-than-expected results for the first quarter of fiscal year 2012, with net sales growth of 22.8% year-over-year driven by a 17.7% increase in volumes. However, operating margins contracted by 145 basis points quarter-over-quarter to 19.1% due to a 150 basis point increase in raw material costs. As a result, net profit grew by 20.5% year-over-year to ₹711 crore, which was slightly below analyst estimates. Going forward, the analyst expects further margin pressure and has revised downward its earnings estimates for fiscal years 2012 and 2013 to factor in higher raw material costs and changes to export incentives.
1) Tata Consultancy Services (TCS) reported strong results for the first quarter of fiscal year 2012, outperforming expectations with revenue growth of 6.3% over the previous quarter and 31.4% over the same quarter of the previous fiscal year.
2) A key highlight was 7.4% quarter-over-quarter growth in business volumes. While profit margins declined due to wage hikes, net profit remained flat due to foreign exchange gains.
3) Management maintained a positive outlook, highlighting strong demand environment and deal pipeline, and expects pricing increases later in the fiscal year.
The document summarizes the Indian stock market outlook and performance on July 15, 2011. It reports that domestic indices closed with modest gains of 0.1-0.4%, while global indices declined. Wholesale price inflation in India rose to 9.44% in June 2011, above estimates and persisting above 9% for seven months, driven by increases in primary articles and fuel costs. Key benchmark levels are identified for determining if the market may continue rallying or correct in the near term.
The summary is:
1) The derivative report analyzes the movement in Nifty futures, options, and individual stocks between July 14-15, 2011.
2) Nifty futures open interest decreased while mini Nifty open interest increased as the market closed at 5599.80.
3) Implied volatility of at-the-money options increased from 17.6% to 18%.
The Sensex and Nifty indices opened lower and traded with volatility, closing marginally lower. On the sectoral front, Realty, Banks and Healthcare gained while IT and FMCG fell. The advance-decline ratio favored advancing stocks. On the daily chart, prices tested but did not close above the downward gap area of 18,679-18,589/5,601-5,580 levels. Immediate resistance is seen at 18,735/5,633, while 18,449/5,541 is crucial support.
1) Infosys reported modest revenue growth of 3.2% qoq for 1QFY2012. EBITDA and margins declined due to wage hikes.
2) Guidance for 2QFY2012 revenue growth was lower than expected at 3.5-5% qoq. Annual revenue growth guidance was unchanged.
3) The analyst revised EPS estimates down and cut the target price to INR 3,200 due to macro concerns and muted guidance.
This document summarizes a derivative report from India Research dated July 13, 2011. Some key points:
- The Nifty futures open interest increased 0.51% while Minifty futures open interest rose 8.2% as the market closed at 5526.15.
- Implied volatility of at-the-money options increased from 18% to 19.75%. PCR-OI decreased from 1.20 to 1.15.
- Total open interest of the market is Rs. 125,816 crore and stock futures open interest is Rs. 33,500 crore.
- FII were net sellers of Rs. 969 crore in the cash market segment. Put-call
The daily technical report provides the following information:
1) The Sensex and Nifty indexes opened with a downside gap and remained negative throughout the day, with the realty, IT, and auto sectors among the major losers.
2) On the daily chart, the indexes tested the 20-day simple moving average for support and closed above it, while the RSI and ADX indicators show a negative crossover.
3) The report recommends selling REL. INFRA. futures with a stop loss of Rs. 579.05 and target of Rs. 552.00.
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Sue Lewis, ILC Trustee
Siobhan Lough, Senior Consultant, Hymans Robertson
Mick McAteer, Co-Director, The Financial Inclusion Centre
Stuart McDonald MBE, Head of Longevity and Democratic Insights, LCP
Anusha Mittal, Managing Director, Individual Life and Pensions, M&G Life
Shelley Morris, Senior Project Manager, Living Pension, Living Wage Foundation
Sarah O'Grady, Journalist
Will Sherlock, Head of External Relations, M&G Plc
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
David Sinclair, Chief Executive, ILC
Jordi Skilbeck, Senior Policy Advisor, Pensions and Lifetime Savings Association
Rt Hon Sir Stephen Timms, former Chair, Work & Pensions Committee
Nigel Waterson, ILC Trustee
Jackie Wells, Strategy and Policy Consultant, ILC Strategic Advisory Board
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1. 1QFY2011 Result Update | Banking
July 31, 2010
Federal Bank ACCUMULATE
CMP Rs347
Performance Highlights Target Price Rs375
Particulars (Rs cr) 1QFY11 4QFY10 % chg (qoq) 1QFY10 % chg (yoy) Investment Period 12 Months
NII 413 410 0.9 290 42.5
Pre-prov. profit Stock Info
335 352 (4.7) 278 20.5
PAT 132 117 12.8 136 (3.3) Sector Banking
Source: Company, Angel Research Market Cap (Rs cr) 5,931
Beta 0.9
Federal Bank recorded net profit decline of 3.3% yoy and growth of 12.8% on a 52 Week High / Low 369/211
sequential basis to Rs132cr, lower than our estimate of Rs152cr mainly on
Avg. Daily Volume 1,25,040
account of lower-than-estimated non-interest income coupled with higher
Face Value (Rs) 10
provisioning expenses. Substantial spike in gross and net NPAs was the key
highlight of the results. We maintain an Accumulate rating on the stock. BSE Sensex 17,868
Nifty 5,368
Core performance below expectations with pressure on asset quality: For Reuters Code FED.BO
1QFY2011, advances growth and deposits growth was muted at 16.6% yoy and Bloomberg Code FB@IN
10.2% yoy, respectively. CASA deposits grew by 22.4% yoy, higher than overall
deposit growth, leading to improvement in CASA ratio to 29.0% (from 26.1% in
1QFY2010 and 26.2% in 4QFY2010). Growth in core non-interest income Shareholding Pattern (%)
excluding treasury gains was also disappointing at 4.3% yoy. The bank’s gross Promoters -
NPAs grew substantially in absolute terms by 27.1% qoq to Rs1,044cr and net
MF / Banks / Indian Fls 36.9
NPAs rose by 55.8% qoq to Rs201cr. The gross and net NPA ratios deteriorated to
FII / NRIs / OCBs 43.2
3.7% and 0.7% (as against 3.0% and 0.5%, respectively, in 4QFY2010),
respectively. The gross slippage spiked to Rs327cr, indicating an annualised Indian Public / Others 19.9
slippage ratio of 4.8%. Till date, loans worth Rs170cr have slipped into NPAs
from restructured accounts (14.9% of the total restructuring), of which Rs65cr
slipped during the quarter. Abs. (%) 3m 1yr 3yr
Sensex 1.8 16.1 17.1
Outlook and valuation: At the CMP, the stock is trading at attractive valuations of Federal Bank 18.8 45.8 29.2
1.02x FY2012E ABV. While lower leverage is leading to low RoEs at present, the
bank’s earnings quality is one of the best amongst peers at the core RoA level. We
recommend an Accumulate rating on Federal Bank, assigning a multiple of 1.10x
FY2012E ABV to arrive at a Target Price of Rs375.
Key Financials
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
NII 1,315 1,411 1,677 1,947
% chg 51.5 7.2 18.9 16.1 Vaibhav Agrawal
022 – 4040 3800 Ext: 333
Net Profit 500 465 620 794
vaibhav.agrawal@angeltrade.com
% chg 36.0 (7.2) 33.5 28.0
NIM (%) 3.8 3.5 3.6 3.4 Amit Rane
EPS (Rs) 29.3 27.2 36.3 46.4 022 – 4040 3800 Ext: 326
P/E (x) 11.9 12.8 9.6 7.5 amitn.rane@angeltrade.com
P/ABV (x) 1.4 1.3 1.1 1.0
RoA (%) 1.4 1.1 1.3 1.4 Shrinivas Bhutda
022 – 4040 3800 Ext: 316
RoE (%) 12.4 10.5 12.5 14.4
shrinivas.bhutda@angeltrade.com
Source: Company, Angel Research
Please refer to important disclosures at the end of this report 1
2. Federal Bank | 1QFY2011 Result Update
Exhibit 1: 1QFY2011 performance
% chg % chg
Particulars (Rs cr) 1QFY2011 4QFY2010 1QFY2010
(qoq) (yoy)
Interest earned 952 953 (0.1) 874 8.9
Interest expenses 538 543 (0.9) 584 (7.8)
NII 413 410 0.9 290 42.5
Non-interest income 110 131 (15.9) 147 (25.5)
Total income 523 540 (3.2) 437 19.6
Operating expenses 188 188 (0.3) 159 18.0
Pre-prov. profit 335 352 (4.7) 278 20.5
Provisions & cont. 133 98 36.2 52 156.7
PBT 202 254 (20.5) 226 (10.8)
Prov. for taxes 70 137 (48.8) 90 (22.1)
PAT 132 117 12.8 136 (3.3)
EPS (Rs) 7.7 6.8 12.8 8.0 (3.3)
Cost-to-income ratio (%) 35.9 34.9 36.4
Effective tax rate (%) 34.7 54.0 39.7
Net NPA (%) 0.7 0.5 0.3
Source: Company, Angel Research
Exhibit 2: 1QFY2011 Actual v/s Angel estimates
Particulars (Rs cr) Actual Estimates Var. (%)
Net interest income 413 402 2.8
Non-interest income 110 127 (13.8)
Total income 523 530 (1.2)
Operating expenses 188 184 1.9
Pre-prov. profit 335 345 (2.9)
Provisions & cont. 133 115 16.2
PBT 202 230 (12.4)
Prov. for taxes 70 78 (10.5)
PAT 132 152 (13.3)
Source: Company, Angel Research
July 31, 2010 2
3. Federal Bank | 1QFY2011 Result Update
Advances growth below industry
Advances growth was muted at 16.6% yoy (against average industry growth of
20% during the quarter) to Rs27,144cr. Deposits stood at just 10.2% yoy to
Rs34,983cr in 1QFY2011 (against average industry growth of 14.0% during the
quarter). CASA deposits grew by 22.4% yoy, higher than overall deposit growth,
leading to improvement in CASA ratio to 29.0% (from 26.1% in 1QFY2010 and
26.2% in 4QFY2010).
Exhibit 3: Trend in advances and deposits
Advances Deposits Credit-Deposit ratio
(Rs cr) (%)
40,000 84.0
30,000 78.0
20,000 72.0
10,000 66.0
- 60.0
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
Source: Company, Angel Research
Exhibit 4: Trend in CASA deposits
CA SA Term Deposits
100%
80%
60% 75.5 73.9 74.2 74.1 73.8 71.0
40%
20% 23.6
20.0 21.3 21.0 21.0 21.1
0% 4.5 4.8 4.8 4.9 5.1 5.4
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
Source: Company, Angel Research
Non-interest income disappoints
Non-interest income declined 25.5% yoy to Rs110cr, driven by a 71.4% yoy
reduction in treasury gains. Growth in core non-interest income excluding treasury
gains was also disappointing at 4.3% yoy. Management attributed this to low
business growth during the quarter.
July 31, 2010 3
4. Federal Bank | 1QFY2011 Result Update
Asset quality under pressure
Federal Bank’s gross NPAs increased substantially in absolute terms by 27.1% qoq
to Rs1,044cr and net NPAs rose by 55.8% qoq to Rs201cr. Gross and net NPA
ratios deteriorated to 3.7% and 0.7% (as against 3.0% and 0.5%, respectively, in
4QFY2010), respectively. The bank’s provision coverage ratio including technical
write-offs stood at 80.0% (83.4% in 4QFY2010 and 88.4% in 1QFY2010). The
bank has restructured Rs46cr of its loans during the quarter, taking the cumulative
restructured loans to Rs1,140cr (4.2% of loans, 24% of the net worth). The gross
slippage spiked to Rs327cr, indicating an annualised slippage ratio of 4.8%.
During the quarter loans of Rs65cr slipped into NPAs from the restructured loans,
taking the cumulative slippages from restructured loans to Rs170cr (14.9% of the
total restructuring).
Exhibit 5: Trend in asset quality
Gross NPAs Net NPAs Coverage ratio (RHS)
(Rs cr) (%)
1,200 90.0
85.0
900
80.0
600 75.0
70.0
300
65.0
- 60.0
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
Source: Company, Angel Research; Note: NPA coverage % excluding technical write-offs upto 3QFY2010
Increased NPA provisions
Due to pressure on asset quality, the bank had to make a provision of Rs136cr
towards NPAs in 1QFY2011, up 45.7% from Rs93cr in 1QFY2010. There was a
write-back of Rs4cr towards provision for investments.
Investment details
The bank’s SLR stood at 26.0%. Out of the total investment book of Rs12,019cr,
the bank’s AFS portfolio constituted 22.1%. The modified duration of overall book
of the bank stood at 5.5 years.
Operating costs rise
Employee cost increased by 8.6% sequentially to Rs105cr. The estimated liability is
expected to be Rs130cr–140cr for the bank. Other operating expenses increased
by 24.4% yoy to Rs83cr. As a result, total operating cost increased by 18.0% yoy to
Rs188cr. The bank's cost-to-income ratio stood at 35.9% (from 34.9% in
4QFY2010 and 36.4% in 1QFY2010).
July 31, 2010 4
5. Federal Bank | 1QFY2011 Result Update
Exhibit 6: Trend in productivity
(%) Cost-to-Income ratio
45.0
36.4 35.0 34.9 35.9
32.3 32.4 33.4
30.5 30.0
30.0
15.0
-
1QFY09
2QFY09
3QFY09
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
Source: Company, Angel Research
Comfortable capital adequacy
The bank’s CAR was strong at 17.9% as compared to 18.4% in 4QFY2010. Tier-I
capital component was reported at 16.6% in 1QFY2011.
Exhibit 7: Comfortable capital adequacy
(%) Tier-I CAR Tier-II CAR
21.0
18.0
15.0
12.0
9.0
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
Source: Company, Angel Research
July 31, 2010 5
6. Federal Bank | 1QFY2011 Result Update
Investment Arguments
Healthy deposit mix: Federal Bank’s CASA deposits grew at a 20.6% CAGR during
FY2005–09, leading to a stable 25% CASA ratio. Further, a key differentiator for
the bank is the low-cost NRI deposits base, which constitutes 16.5% of total
deposits. Thus, effectively, low-cost deposits as a proportion of total deposits stand
at around 41%, which are expected to underpin NIMs of about 3.1% in FY2012E,
even as the bank grows its advances faster than the industry to leverage its large
net worth.
Impact of Dubai crisis within manageable limits: The stock has been an
underperformer due to concerns over the impact of the Dubai crisis on the bank’s
business model, which benefits meaningfully from Middle East NRI clients.
However, as indicated by the management, the bank has a very low direct loan
exposure of about Rs350cr (1.3% of loan book) to these clients. Hence, the impact
of the crisis on asset quality is expected to be within manageable limits.
Reasonable valuations: At the CMP, the stock is trading at attractive valuations of
1.02x FY2012E ABV. While lower leverage is leading to low RoEs at present, the
bank’s earnings quality is one of the best amongst peers at the core RoA level. We
recommend an Accumulate on the stock, assigning a multiple of 1.10x FY2012E
ABV to arrive at a Target Price of Rs375.
July 31, 2010 6
7. Federal Bank | 1QFY2011 Result Update
Exhibit 8: Key assumptions
Earlier estimates Revised estimates
Particulars (%)
FY2011E FY2012E FY2011E FY2012E
Credit growth 23.0 24.0 23.0 24.0
Deposit growth 23.0 24.0 23.0 24.0
CASA ratio 24.5 22.5 24.5 22.5
NIM 3.6 3.4 3.6 3.4
Other income growth 2.2 21.3 0.3 21.3
Growth in staff expenses 18.4 19.2 18.4 19.2
Growth in other expenses 18.4 19.2 18.4 19.2
Slippages 3.5 2.7 3.5 2.7
Coverage ratio 72.7 69.8 76.0 76.2
Treasury gain/(loss) (% of investments) 0.1 0.1 0.1 0.1
Source: Company, Angel Research
Exhibit 9: Change in estimates
FY2011E FY2012E
Particulars (Rs cr) Earlier Revised Earlier Revised
% chg % chg
estimates estimates estimates estimates
NII 1,677 1,677 - 1,947 1,947 -
Non-interest income 542 533 (1.8) 658 646 (1.8)
Total income 2,219 2,210 (0.4) 2,604 2,593 (0.5)
Operating expenses 801 801 - 955 955 -
Pre-prov. profit 1,418 1,408 (0.7) 1,649 1,637 (0.7)
Provisions & cont. 468 468 - 434 434 0.1
PBT 950 940 (1.0) 1,215 1,203 (1.0)
Prov. for taxes 323 320 (1.0) 413 409 (1.0)
PAT 627 620 (1.0) 802 794 (1.0)
Source: Company, Angel Research
Exhibit 10: P/ABV band
Price 0.60x 0.80x 1.10x 1.30x 1.60x
(Rs)
600
500
400
300
200
100
0
Jun-03
Jun-10
Jan-04
Jul-07
Jan-11
Apr-02
Apr-09
Aug-04
Feb-08
Mar-05
Sep-08
Nov-02
Nov-09
May-06
Dec-06
Oct-05
Source: Company, Angel Research
July 31, 2010 7
11. Federal Bank | 1QFY2011 Result Update
Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please
refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and
its affiliates may have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement Federal Bank
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.
Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)
July 31, 2010 11