Infosys reported a 4.3% quarter-over-quarter growth in revenues to Rs. 6,198 crore for the first quarter of fiscal year 2011, backed by a 7.6% growth in volumes. However, earnings before interest and taxes (EBIT) margins fell by 1.8% due to annual wage hikes. Infosys revised its fiscal year 2011 revenue growth guidance upwards from 16-18% to 19-21% in rupee terms and maintained its earnings per share growth guidance of 7.2-11.5%. The growth was broad-based across services and verticals led by the banking, financial services and insurance sector.
Infosys reported strong revenue growth of 12.1% quarter-over-quarter for 2QFY2011, driven by persistent volume growth of 7.2% and better business mix. Operating margins rebounded to 33.3% from cost efficiencies. The company revised its FY2011 revenue guidance upwards to 24-25% growth and EPS growth to 10.4-12.2% in US dollar terms. Broad-based growth was seen across industries like retail, BFSI, and manufacturing as well as geographies like Europe and the US. Hiring continued to be strong though utilisation improved.
Wipro reported financial results for the first quarter of fiscal year 2011, with revenues growing 3.1% over the previous quarter and 12.6% over the same quarter last year. Operating profit margins expanded due to effective currency hedges, and net income grew 9% over the previous quarter and 30.5% over the first quarter of fiscal year 2010. The company's performance was driven by strong volume growth in IT services revenues, with new client additions and large deal wins during the quarter. The analyst maintained an "Accumulate" rating on Wipro stock, with a target price representing 13% upside.
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.
Mphasis reported 4.8% quarter-over-quarter revenue growth to Rs. 1,279 crore for 3QFY2010. The company saw mixed performance, with strong volume growth in application and ITO segments, but steep pricing cuts of 9.6% in applications. Margins declined slightly due to pricing changes and salary hikes, but were supported by restructuring in BPO and cost optimization in ITO. Revenue was driven by financial services, technology, and healthcare verticals, while telecom declined due to client issues. The company added 22 new clients spanning industries and saw improved wallet share with existing clients.
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.
SAIL's 4QFY2010 results were in line with estimates. Revenues grew 1.8% to Rs11,955cr due to higher sales volumes and average realization. EBITDA margins expanded significantly to 25.9% due to lower raw material costs and consumption, leading to a 40.2% rise in net income to Rs2,085cr. While demand is expected to remain strong, the company maintains a neutral outlook given rich valuations and plans for a public offering limiting further 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.
BGR Energy Systems reported a very strong 4QFY2010 performance, with revenues growing 130.7% and net profit up 130.6% over the previous year. For the full year, revenues grew 59.7% and net profit increased 74.7%. The company maintained a healthy order backlog of Rs10,230cr and expects continued growth in orders. The analyst maintains a Buy recommendation on the stock with a target price of Rs722, noting attractive valuation multiples and expecting revenue and profit to grow at 36.7% and 31.2% CAGR over the next few years.
Infosys reported strong revenue growth of 12.1% quarter-over-quarter for 2QFY2011, driven by persistent volume growth of 7.2% and better business mix. Operating margins rebounded to 33.3% from cost efficiencies. The company revised its FY2011 revenue guidance upwards to 24-25% growth and EPS growth to 10.4-12.2% in US dollar terms. Broad-based growth was seen across industries like retail, BFSI, and manufacturing as well as geographies like Europe and the US. Hiring continued to be strong though utilisation improved.
Wipro reported financial results for the first quarter of fiscal year 2011, with revenues growing 3.1% over the previous quarter and 12.6% over the same quarter last year. Operating profit margins expanded due to effective currency hedges, and net income grew 9% over the previous quarter and 30.5% over the first quarter of fiscal year 2010. The company's performance was driven by strong volume growth in IT services revenues, with new client additions and large deal wins during the quarter. The analyst maintained an "Accumulate" rating on Wipro stock, with a target price representing 13% upside.
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.
Mphasis reported 4.8% quarter-over-quarter revenue growth to Rs. 1,279 crore for 3QFY2010. The company saw mixed performance, with strong volume growth in application and ITO segments, but steep pricing cuts of 9.6% in applications. Margins declined slightly due to pricing changes and salary hikes, but were supported by restructuring in BPO and cost optimization in ITO. Revenue was driven by financial services, technology, and healthcare verticals, while telecom declined due to client issues. The company added 22 new clients spanning industries and saw improved wallet share with existing clients.
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.
SAIL's 4QFY2010 results were in line with estimates. Revenues grew 1.8% to Rs11,955cr due to higher sales volumes and average realization. EBITDA margins expanded significantly to 25.9% due to lower raw material costs and consumption, leading to a 40.2% rise in net income to Rs2,085cr. While demand is expected to remain strong, the company maintains a neutral outlook given rich valuations and plans for a public offering limiting further 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.
BGR Energy Systems reported a very strong 4QFY2010 performance, with revenues growing 130.7% and net profit up 130.6% over the previous year. For the full year, revenues grew 59.7% and net profit increased 74.7%. The company maintained a healthy order backlog of Rs10,230cr and expects continued growth in orders. The analyst maintains a Buy recommendation on the stock with a target price of Rs722, noting attractive valuation multiples and expecting revenue and profit to grow at 36.7% and 31.2% CAGR over the next few years.
Exide Industries reported a 35.1% increase in net profit for 1QFY2011 compared to the previous year. Net sales grew 27.5% year-over-year to Rs1,152 crore, exceeding estimates. Earnings before interest, taxes, depreciation, and amortization margins improved from the previous quarter due to a decline in other expenditures. The analyst maintains an "Accumulate" rating for Exide Industries due to reasonable valuations and expects net sales and profit to grow annually over the next two years.
DLF reported 4QFY2010 results that were marginally below expectations due to higher interest and tax expenses. The merger with DAL and purchase of preference shares from SC Asia will increase net debt to 0.65-0.75x in 1QFY2011 from the current 0.53x. Strong volume guidance of 15-18mn sq ft is given for FY2011. The analyst maintains a Neutral rating and says the stock's performance depends on reducing debt levels through non-core asset sales and commercial segment recovery.
Exide Industries reported a 35.1% increase in net profit for the first quarter of fiscal year 2011. Net sales grew 27.5% due to a substantial increase in both original equipment and replacement auto battery sales. While raw material costs increased, operating margins improved on a quarter-over-quarter basis due to a decline in other expenditures and average lead prices. The analyst maintains an "Accumulate" rating for Exide Industries due to reasonable valuations and expectations for continued double-digit revenue and earnings growth over the next two fiscal years.
The document provides an analysis of Consolidated Construction Consortium's (CCCL) 4QFY2010 results and outlook. Some key points:
- CCCL reported 33.2% revenue growth for 4QFY2010 inline with estimates, but order inflow for FY2010 was below expectations at Rs2,166cr.
- The company's current order book stands at Rs3,392cr, providing 1.4x revenue visibility for FY2011, which is lower than peers.
- The analyst expects 19.2% revenue CAGR for CCCL over FY2010-2012 on the back of its order book and recovery in private capex.
- C
1) Marico reported a 13.4% increase in quarterly revenue to Rs. 790.1 crore, above estimates, led by 16% volume growth in its core brands Parachute and Saffola.
2) Earnings grew 27% to Rs. 73.7 crore after adjusting for tax rate declines, despite margins contracting.
3) The analyst upgrades Marico stock from "Reduce" to "Neutral" and increases earnings estimates by 2-3% based on strong volume growth and lower taxes boosting profits.
For the fourth quarter of 2010, TVS Motor reported net sales of Rs. 1,216 crore, up 33.7% year-over-year due to a 27.8% increase in volumes and 8.7% increase in realizations. Operating margins expanded 118 basis points due to a 416 basis point drop in raw material costs. Net profit was Rs. 20.3 crore, up 38.9% year-over-year. Going forward, TVS Motor expects to improve market share following new product launches but faces competitive pressures. The analyst maintains a neutral rating due to recent stock price appreciation and TVS Motor's inconsistent performance history.
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.
McNally Bharat Engineering Co. Ltd. (MBE) reported disappointing financial results for the first quarter of fiscal year 2011, with revenues, earnings, and margins coming in below previous estimates. While MBE's order backlog remains strong at Rs. 4,803 crores, providing high revenue visibility, its subsidiary McNally Sayaji also saw subdued performance. However, analysts maintain a 'Buy' recommendation due to MBE's experience in various sectors, ongoing government infrastructure spending, and significant projected market opportunities over the next few years totaling Rs. 51,600 crores. Estimates have been revised downward to account for the weak quarterly performance.
1) Finolex Cables reported a 50.4% year-over-year increase in net sales to Rs. 493.1 crore for the first quarter of FY2011, driven by strong growth in the electrical cables segment.
2) Operating margins declined to 8% from 15.2% in the prior year quarter due to higher raw material costs, though margins improved sequentially.
3) Net profit increased 4.5% year-over-year to Rs. 23 crore for the quarter despite margin pressure, with sales growth offsetting higher costs.
Reliance Industries reported lower-than-expected quarterly results, with profits impacted by lower-than-expected refining margins. Revenue grew 120.7% year-over-year primarily due to higher refining revenues, but margins were lower than estimates. While volume growth was strong, profitability was hurt by refining margins of $7.5/bbl compared to an estimated $8.5/bbl. The analyst maintains a buy rating due to expectations for margin improvement and inorganic growth opportunities.
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.
ONGC reported higher than expected results for the fourth quarter of fiscal year 2010 driven by increased net realizations and other operating income. Earnings before interest, taxes, depreciation, and amortization were above estimates due to higher other income. Depreciation costs were also higher than expected. The company maintained an accumulate rating and target price of Rs1,233 based on the positive impact of increased gas prices and potential for further reforms in the oil and gas sector.
All cargo result update 1 qcy2010 050510Angel Broking
Allcargo Global Logistics' 1QCY2010 consolidated results were above expectations due to strong pick-up in volumes across segments. While revenues grew by 21.9% year-over-year, operating profit grew by a mere 2.7% due to inability to fully pass on increased freight rates in the ECU line, resulting in margin erosion. However, lower interest expenses and tax rate led to a 23.2% jump in net profit. The company maintained a neutral outlook while being well positioned in container segments.
MPL Result Update 4qfy2010-030510-finalAngel Broking
Madhucon Projects reported disappointing results for the fourth quarter of fiscal year 2010 that were below expectations. While revenue grew robustly due to higher subcontracting in the power segment, operating margins hit a historical low of 6.4% due to the heavy subcontracting. The analyst maintains a "Buy" rating but lowers the target price to Rs. 190 per share based on revised estimates factoring in lower margins and a higher holding company discount applied to the valuation of Madhucon Infra subsidiary. Near-term revenue visibility comes from existing power segment orders but margins are expected to remain under pressure from ongoing subcontracting.
SpiceJet reported strong financial results for the 1st quarter of FY2011, with net sales growing 34.9% year-over-year to Rs708cr, above expectations. Operating margins expanded significantly to 8.3% due to higher passenger loads. Net profit increased 109.6% to Rs55cr, also above estimates, driven by improved operating efficiency. The analyst maintains an 'Accumulate' rating on SpiceJet, expecting sales and profits to grow rapidly in the coming years as the company expands its fleet and benefits from strong industry demand fundamentals.
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.
PTC India reported a 121.8% quarter-over-quarter growth in net revenue to Rs. 2,758 cr for 1QFY2011, driven by a 36.7% year-over-year increase in sales volume. Operating profit grew 194.2% qoq and 85.3% yoy to Rs. 28 cr due to higher trading margins. However, net profit declined 16.7% yoy to Rs. 28 cr due to lower other income and higher taxes. Going forward, the company expects further volume growth as new projects come online and higher trading margins will boost profits.
McNally Bharat Engineering reported strong growth in 4QFY2010, with sales and profit growth of 19% and 142% respectively, ahead of estimates. This was driven by higher EBITDA margins and lower interest costs. For the full year, standalone sales grew 50% and EBITDA margins improved 80 basis points. Going forward, the company is well positioned for robust growth over the next few years due to its large order backlog of 2.6 times FY2010 revenue. The analyst maintains a 'Buy' recommendation with a revised target price of Rs486.
Asian Paints reported strong quarterly results that beat estimates. Revenue grew 25% year-over-year to Rs. 1,830 crore, driven by 18-20% volume growth and 2-3% price-led growth. Earnings grew 26% to Rs. 222 crore due to operating leverage, although gross margins contracted due to rising input costs. The analyst maintains an Accumulate rating and revised target price of Rs. 2,773, expecting sustained 15.5% volume growth, price hikes of 8%, and operating margins around 18%.
Consolidated Construction Consortium (CCCL) reported net sales of Rs.508 crore for 1QFY2011, in line with expectations. Operating margins of 8.3% and net profits of Rs.18.8 crore were also as expected. Order inflows grew 152% year-over-year to Rs.1,706 crore, indicating a revival in commercial and infrastructure segments. CCCL maintains an order backlog of Rs.4,527 crore, providing visibility for the next few years. While margins and profits met estimates this quarter, analysts maintain an 'Accumulate' rating given strong order backlog and expected 20% earnings growth over FY2010-12.
- Indian stock indices rose to their highest levels in 25 months, with the Sensex and Nifty gaining 1.4% and 1.5% respectively, lifted by sustained buying in index pivotals.
- Regional stocks were mixed, with metal and auto stocks rising on firm commodity prices and strong auto sales, while IT stocks declined due to a stronger rupee.
- In corporate news, steel makers raised prices for the third time in 2010 due to higher raw material costs, while ACC reported a 3.5% drop in cement dispatches for March.
The document provides a market summary for May 7, 2010 including:
1) Key indices like Nifty and Sensex opened lower but closed slightly down.
2) Top gainers and losers among stocks.
3) Sectoral performances with CG and Metal losing the most.
4) A view is provided that indices may trade in a range of 17000-17920/5100-5366 in the coming week.
Exide Industries reported a 35.1% increase in net profit for 1QFY2011 compared to the previous year. Net sales grew 27.5% year-over-year to Rs1,152 crore, exceeding estimates. Earnings before interest, taxes, depreciation, and amortization margins improved from the previous quarter due to a decline in other expenditures. The analyst maintains an "Accumulate" rating for Exide Industries due to reasonable valuations and expects net sales and profit to grow annually over the next two years.
DLF reported 4QFY2010 results that were marginally below expectations due to higher interest and tax expenses. The merger with DAL and purchase of preference shares from SC Asia will increase net debt to 0.65-0.75x in 1QFY2011 from the current 0.53x. Strong volume guidance of 15-18mn sq ft is given for FY2011. The analyst maintains a Neutral rating and says the stock's performance depends on reducing debt levels through non-core asset sales and commercial segment recovery.
Exide Industries reported a 35.1% increase in net profit for the first quarter of fiscal year 2011. Net sales grew 27.5% due to a substantial increase in both original equipment and replacement auto battery sales. While raw material costs increased, operating margins improved on a quarter-over-quarter basis due to a decline in other expenditures and average lead prices. The analyst maintains an "Accumulate" rating for Exide Industries due to reasonable valuations and expectations for continued double-digit revenue and earnings growth over the next two fiscal years.
The document provides an analysis of Consolidated Construction Consortium's (CCCL) 4QFY2010 results and outlook. Some key points:
- CCCL reported 33.2% revenue growth for 4QFY2010 inline with estimates, but order inflow for FY2010 was below expectations at Rs2,166cr.
- The company's current order book stands at Rs3,392cr, providing 1.4x revenue visibility for FY2011, which is lower than peers.
- The analyst expects 19.2% revenue CAGR for CCCL over FY2010-2012 on the back of its order book and recovery in private capex.
- C
1) Marico reported a 13.4% increase in quarterly revenue to Rs. 790.1 crore, above estimates, led by 16% volume growth in its core brands Parachute and Saffola.
2) Earnings grew 27% to Rs. 73.7 crore after adjusting for tax rate declines, despite margins contracting.
3) The analyst upgrades Marico stock from "Reduce" to "Neutral" and increases earnings estimates by 2-3% based on strong volume growth and lower taxes boosting profits.
For the fourth quarter of 2010, TVS Motor reported net sales of Rs. 1,216 crore, up 33.7% year-over-year due to a 27.8% increase in volumes and 8.7% increase in realizations. Operating margins expanded 118 basis points due to a 416 basis point drop in raw material costs. Net profit was Rs. 20.3 crore, up 38.9% year-over-year. Going forward, TVS Motor expects to improve market share following new product launches but faces competitive pressures. The analyst maintains a neutral rating due to recent stock price appreciation and TVS Motor's inconsistent performance history.
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.
McNally Bharat Engineering Co. Ltd. (MBE) reported disappointing financial results for the first quarter of fiscal year 2011, with revenues, earnings, and margins coming in below previous estimates. While MBE's order backlog remains strong at Rs. 4,803 crores, providing high revenue visibility, its subsidiary McNally Sayaji also saw subdued performance. However, analysts maintain a 'Buy' recommendation due to MBE's experience in various sectors, ongoing government infrastructure spending, and significant projected market opportunities over the next few years totaling Rs. 51,600 crores. Estimates have been revised downward to account for the weak quarterly performance.
1) Finolex Cables reported a 50.4% year-over-year increase in net sales to Rs. 493.1 crore for the first quarter of FY2011, driven by strong growth in the electrical cables segment.
2) Operating margins declined to 8% from 15.2% in the prior year quarter due to higher raw material costs, though margins improved sequentially.
3) Net profit increased 4.5% year-over-year to Rs. 23 crore for the quarter despite margin pressure, with sales growth offsetting higher costs.
Reliance Industries reported lower-than-expected quarterly results, with profits impacted by lower-than-expected refining margins. Revenue grew 120.7% year-over-year primarily due to higher refining revenues, but margins were lower than estimates. While volume growth was strong, profitability was hurt by refining margins of $7.5/bbl compared to an estimated $8.5/bbl. The analyst maintains a buy rating due to expectations for margin improvement and inorganic growth opportunities.
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.
ONGC reported higher than expected results for the fourth quarter of fiscal year 2010 driven by increased net realizations and other operating income. Earnings before interest, taxes, depreciation, and amortization were above estimates due to higher other income. Depreciation costs were also higher than expected. The company maintained an accumulate rating and target price of Rs1,233 based on the positive impact of increased gas prices and potential for further reforms in the oil and gas sector.
All cargo result update 1 qcy2010 050510Angel Broking
Allcargo Global Logistics' 1QCY2010 consolidated results were above expectations due to strong pick-up in volumes across segments. While revenues grew by 21.9% year-over-year, operating profit grew by a mere 2.7% due to inability to fully pass on increased freight rates in the ECU line, resulting in margin erosion. However, lower interest expenses and tax rate led to a 23.2% jump in net profit. The company maintained a neutral outlook while being well positioned in container segments.
MPL Result Update 4qfy2010-030510-finalAngel Broking
Madhucon Projects reported disappointing results for the fourth quarter of fiscal year 2010 that were below expectations. While revenue grew robustly due to higher subcontracting in the power segment, operating margins hit a historical low of 6.4% due to the heavy subcontracting. The analyst maintains a "Buy" rating but lowers the target price to Rs. 190 per share based on revised estimates factoring in lower margins and a higher holding company discount applied to the valuation of Madhucon Infra subsidiary. Near-term revenue visibility comes from existing power segment orders but margins are expected to remain under pressure from ongoing subcontracting.
SpiceJet reported strong financial results for the 1st quarter of FY2011, with net sales growing 34.9% year-over-year to Rs708cr, above expectations. Operating margins expanded significantly to 8.3% due to higher passenger loads. Net profit increased 109.6% to Rs55cr, also above estimates, driven by improved operating efficiency. The analyst maintains an 'Accumulate' rating on SpiceJet, expecting sales and profits to grow rapidly in the coming years as the company expands its fleet and benefits from strong industry demand fundamentals.
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.
PTC India reported a 121.8% quarter-over-quarter growth in net revenue to Rs. 2,758 cr for 1QFY2011, driven by a 36.7% year-over-year increase in sales volume. Operating profit grew 194.2% qoq and 85.3% yoy to Rs. 28 cr due to higher trading margins. However, net profit declined 16.7% yoy to Rs. 28 cr due to lower other income and higher taxes. Going forward, the company expects further volume growth as new projects come online and higher trading margins will boost profits.
McNally Bharat Engineering reported strong growth in 4QFY2010, with sales and profit growth of 19% and 142% respectively, ahead of estimates. This was driven by higher EBITDA margins and lower interest costs. For the full year, standalone sales grew 50% and EBITDA margins improved 80 basis points. Going forward, the company is well positioned for robust growth over the next few years due to its large order backlog of 2.6 times FY2010 revenue. The analyst maintains a 'Buy' recommendation with a revised target price of Rs486.
Asian Paints reported strong quarterly results that beat estimates. Revenue grew 25% year-over-year to Rs. 1,830 crore, driven by 18-20% volume growth and 2-3% price-led growth. Earnings grew 26% to Rs. 222 crore due to operating leverage, although gross margins contracted due to rising input costs. The analyst maintains an Accumulate rating and revised target price of Rs. 2,773, expecting sustained 15.5% volume growth, price hikes of 8%, and operating margins around 18%.
Consolidated Construction Consortium (CCCL) reported net sales of Rs.508 crore for 1QFY2011, in line with expectations. Operating margins of 8.3% and net profits of Rs.18.8 crore were also as expected. Order inflows grew 152% year-over-year to Rs.1,706 crore, indicating a revival in commercial and infrastructure segments. CCCL maintains an order backlog of Rs.4,527 crore, providing visibility for the next few years. While margins and profits met estimates this quarter, analysts maintain an 'Accumulate' rating given strong order backlog and expected 20% earnings growth over FY2010-12.
- Indian stock indices rose to their highest levels in 25 months, with the Sensex and Nifty gaining 1.4% and 1.5% respectively, lifted by sustained buying in index pivotals.
- Regional stocks were mixed, with metal and auto stocks rising on firm commodity prices and strong auto sales, while IT stocks declined due to a stronger rupee.
- In corporate news, steel makers raised prices for the third time in 2010 due to higher raw material costs, while ACC reported a 3.5% drop in cement dispatches for March.
The document provides a market summary for May 7, 2010 including:
1) Key indices like Nifty and Sensex opened lower but closed slightly down.
2) Top gainers and losers among stocks.
3) Sectoral performances with CG and Metal losing the most.
4) A view is provided that indices may trade in a range of 17000-17920/5100-5366 in the coming week.
The Nifty futures open interest decreased by 28.45% while the Minifity futures open interest decreased by 13.34% as the market closed at 6143.40. The Nifty October future closed at a premium of 32.90 points against a premium of 10.85 points in the previous session, while the November future closed at a premium of 44.20 points. The PCR-OI decreased from 2.00 to 1.36. FIIs were net buyers of Rs. 1,825 crores in the cash market segment and significant build up was seen in the 6200 and 6300 call option series.
Ramky Infrastructure is tapping the IPO market to raise Rs. 530 crores through a fresh issue of equity shares and an offer for sale. The company operates in the construction and infrastructure development sectors across six segments. It has a diversified presence across various states in India. Ramky has a robust order backlog of Rs. 7,432 crores providing revenue visibility. It is expected to grow at a CAGR of 31.7% over FY2010-12 driven by its strong order book and presence in growing segments like water and waste water. The company has delivered healthy return ratios over 20% in the past through careful project selection and efficient resource utilization.
The document provides a summary of derivative market activity in India on August 12, 2010. It notes that open interest in Nifty futures increased while Minifity futures decreased. The Nifty August future closed at a discount. Implied volatility of at-the-money options increased. Few stocks saw positive cost of carry. OI increased most for EDUCOMP and IVRCLINFRA futures while decreasing for JINDALSTEL and IBREALEST. The put-call ratio for Nifty decreased.
Derivatives Report - September 16, 2010Angel Broking
The document provides a summary of derivative market activity in India for September 16, 2010. Key points include:
- Open interest for Nifty futures increased 4.21% while for Minifity futures it rose 2.51% as the market closed at 5860.95.
- Nifty September futures closed at a discount of 0.85 points versus a premium of 16.45 points previously. October futures closed at a premium of 9.75 points.
- Total open interest in the market was Rs. 2,03,458 crore with stock futures open interest at Rs. 51,389 crore.
The document provides a market summary for July 22, 2010. It summarizes that the key indices closed positively but ranged between support and resistance levels. The top gainers and losers among stocks are listed. Sectoral performances are also summarized, with metals and realty performing best. The document analyzes support and resistance levels for the indices and provides potential pivot levels for various stocks to watch. It identifies some specific stocks with positive and negative bias. In summary, the document analyzes the day's market activity and provides technical indicators for the short-term market outlook and trading opportunities.
Maruti Suzuki reported poor performance for 1QFY2011. Net sales came in marginally below estimates due to lower export realization. Operating profit was substantially impacted by a large contraction in operating margins. Higher royalty charges and increased input costs hurt operating performance. Net profit declined significantly year-over-year and missed estimates due to lower export realization, margin contraction, and higher costs.
The document provides a summary of derivative market activity in India for August 05, 2010. Key points include:
- Open interest for Nifty futures increased 3.71% while for Minifity futures it rose 15.55% as the market closed at 5467.85.
- Nifty August futures closed at a discount of 7.65 points and September futures at a discount of 3.20 points.
- Total open interest in the market was Rs. 1,40,468 crore with stock futures open interest at Rs. 42,614 crore.
- SOBHA, SRTRANSFIN, and PUNJLLOYD saw increases in open interest of over 10
The derivative report provides a summary of activity in the Indian derivatives market on July 05, 2010:
- Open interest in Nifty futures increased by 1.61% while open interest in Mini Nifty futures rose by 0.89% as the market closed at 5237.10 points.
- Some stocks saw significant increases in open interest like MRPL (+38.40%), GRASIM (+36.54%), and CONCOR (+23.33%) while others decreased like MPHASIS (-13.79%), WIPRO (-6.74%), and RELINFRA (-5.54%).
- The report also analyzes put-call ratios, volatility, FII activity and provides strategies
Godawari Power & Ispat reported mediocre results for the first quarter of FY2011 with net sales falling 9.6% year-over-year to Rs196 crore due to reduced sponge iron production and lower steel sales. EBITDA margins grew 383 basis points year-over-year to 18.4% but fell 119 basis points quarter-over-quarter due to higher coal and iron ore costs. Net profit declined 12.8% year-over-year to Rs13 crore. The brokerage maintains a 'Buy' rating with a revised target price of Rs313, expecting earnings to grow at a 93.6% CAGR through FY2012 given ramped up iron
Jagran Prakashan reported robust revenue growth of 17.4% year-over-year for the fourth quarter, driven by a 19.9% increase in advertising revenue. Earnings grew 66.8% year-over-year due to a 649 basis point expansion in gross margins from declining newsprint prices. While circulation revenue was flat, the analyst maintains a "Buy" rating and Rs160 target price, expecting 15-16% revenue and earnings growth over the next two years from advertising growth and sustained margins.
The key points from the document are:
1) The Indian stock market indices surged in the morning on positive global cues and good earnings reports, but later slipped into negative territory. The Sensex closed flat while the Nifty closed up 0.3%.
2) Several companies reported their quarterly earnings, with Hindustan Zinc, HCL Tech, and TVS Motors posting revenue and profit growth. Nestle India, ACC, Ambuja Cement, Gujarat Gas and Rallis India are scheduled to report earnings today.
3) The document provides analysis and recommendations on some of the companies that reported earnings, such as maintaining an accumulate rating on HCL Tech and Hind
- The key Indian indices edged higher at the beginning of trading due to sustained foreign buying and monsoon revival, but later slipped into negative territory as Asian stocks declined. However, they regained some ground as services sector growth continued.
- TCS, Wipro and Infosys gained 2-4%, while Bharti Airtel, ACC and Tata Steel lost 1-2%. Mid-caps like Jai Corp and Hathway Cables rose 6-9%, while REI Agro and Punj Lloyd fell 4-7%.
- The report provides outlook for the day's trading and lists various companies releasing earnings results.
The Reserve Bank of India raised interest rates by 25 basis points to anchor inflation expectations as inflation was becoming more broad-based. While monetary tightening is justified to control inflation, the document argues that disruptive tightening is not needed as interest rates remain below peak levels and food prices, which make up a large portion of inflation, may moderate. Credit growth is outpacing deposit growth, which could lead banks to raise lending and deposit rates going forward.
Sesa Goa reported lower than expected results for the second quarter of FY2011. Top line growth of 70.5% year-over-year was driven by a 23.7% increase in iron ore sales volumes, however volumes were impacted by export restrictions imposed by the Karnataka government. Average iron ore realizations were lower than expected at US$73 per tonne, contributing to a sharp decline in EBITDA margins and net profits compared to the previous quarter. Outlook for the year remains muted with management reducing volume guidance to 10% growth due to ongoing export issues in Karnataka.
The markets in India cooled off after strong gains the previous session, with the key indices like the Sensex and Nifty closing lower by 1.1% each. Some sectors like metals declined more sharply, with the metal index down 2.6%. Select pharma and infrastructure stocks gained, but overall it was a weak market day with declines widespread across sectors. Technical indicators suggest the markets may see further weakness in the near term if indices remain below key support levels in early trade.
The document recommends switching investment from R-Power to Reliance Infrastructure and from National Aluminum to Hindalco due to their stronger growth prospects and more attractive valuations. It also recommends buying SBI and reducing position in PNB as SBI is gaining market share while PNB is losing share, and SBI's earnings quality and valuations are superior.
The key Indian stock market indices closed flat, erasing early gains as European markets turned negative. The mid-cap and small-cap indices gained 0.3% each. Select companies like M&M, Wipro and Bharti Airtel rose up to 1%, while RCOM, Hindalco and ONGC declined 1-3%. Two companies announced news - construction firm CCCL bagged orders worth Rs. 1,218 crore and auto parts maker TACO plans to exit a joint venture to raise funds for parent Tata Motors. The markets may see further gains if indices trade above key support levels in early trade, but may correct if trading below those levels.
The market remained volatile throughout the day in India, with the key indices closing down around 1.6-1.7% as Asian stocks weakened initially and European markets opened lower later in the day. Several large companies such as Bharti Airtel, ITC and Grasim closed up slightly while Tata Steel, SBI and Hindalco fell 3-5%. Mid and small cap indices also ended lower. Earnings results from companies such as DLF, Deccan Chronicle and Nalco were mixed, with some beating estimates but others missing. Previews suggested GAIL and NTPC results later in the day may show growth.
Infosys reported strong financial results for the fourth quarter of fiscal year 2010 that exceeded guidance and analyst estimates. Revenue grew 3.5% sequentially in rupees and 5.2% in US dollars, above the company's guidance range. Earnings before interest, taxes, depreciation and amortization margins contracted due to increased hiring and expenses, resulting in lower net profit growth of 2.2%. For fiscal year 2011, Infosys provided guidance for 15.9-18% revenue growth and 8.7-4.3% earnings per share growth in US dollars, but more muted 9-11% revenue growth and -2.6-1.4% earnings per share growth in rupees due
Tech Mahindra reported a 4.2% quarter-over-quarter decline in revenue for the first quarter of fiscal year 2011, which was attributed to adverse currency movements and slower client decision making. The company's profitability declined as well, with earnings before interest, taxes, depreciation, and amortization margins contracting 480 basis points and net income declining 36.4% compared to the previous quarter. However, revenue grew 1.9% year-over-year and management expects growth to be led by strong volume increases from large transformational deals in the pipeline. While the outlook remains positive, uncertainties around currency fluctuations and aggressive hiring could pressure margins going forward.
3i Infotech reported subdued quarterly results with a 1.4% increase in revenue. EBITDA margins declined slightly despite a 10% wage hike. The bottom line declined from the previous quarter due to higher costs and taxes, though it improved year-over-year. The company maintained its full-year revenue guidance, expecting growth of 11-14% driven by a strong order backlog. While initiatives to boost integrated offerings are expected to drive long-term growth, margins may be pressured in the near-term from operational investments. The report maintains a Buy recommendation based on a revised target price implying a 6x forward P/E multiple.
Infotech Enterprises reported modest revenue growth of 2% for the fourth quarter of fiscal year 2010. Net profit increased 35% due to a 130% rise in other income and lower taxes. While revenue from the engineering and manufacturing segment grew 6%, the utilities, telecom, and government segment declined 6%. Looking forward, the company expects strong revenue growth driven by its order pipeline and improving business environment. The analyst maintains a 'Buy' rating with a target price implying 20% upside.
TCS reported strong financial results for the fourth quarter of fiscal year 2010 that exceeded expectations. Revenue grew 1.1% over the previous quarter to Rs. 7,737 crore, driven by a 4% increase in volumes. However, currency fluctuations reduced realized revenue. Improved operating levers helped expand operating margins by 19 basis points sequentially and 368 basis points year-over-year. Strong other income and profit growth of 7.4% sequentially and 47.1% year-over-year exceeded forecasts. The company added over 10,000 employees in the quarter and closed 10 large deals.
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.
Ashok Leyland reported a 141.3% year-over-year growth in net sales to Rs2,939 crore for the fourth quarter of fiscal year 2010, in line with expectations. Net profit grew 317.6% year-over-year to Rs222.7 crore, higher than expected due to better operating margins and a change in depreciation policy. Operating margins increased 345 basis points due to price hikes, lower raw material prices, and cost reduction efforts. The company expects commercial vehicle industry volumes to grow 15-18% in fiscal year 2011.
NIIT reported a 1.9% decline in consolidated net revenues for the fourth quarter of fiscal year 2010 but net income grew 40.2% due to a 400 basis point increase in EBITDA margins. While the company's school learning services and corporate learning services businesses saw revenue declines, its individual learning solutions segment grew revenues by 13.9% driven by growth in the IT and formal training management sectors. Strong margin expansion and improved performance in the individual learning segment helped boost profits despite currency headwinds.
HCL Technologies reported an 11.4% quarter-over-quarter revenue growth for the fourth quarter of FY2010, driven by a 10% volume growth. However, margins contracted due to lower utilization rates, currency impacts, and higher spending. While revenue grew, net profit declined slightly due to higher foreign exchange losses. Going forward, the company expects salary increases to impact margins in the first quarter of FY2011 but aims to offset this through operational improvements.
Elecon Engineering reported a 15% increase in revenue for the first quarter of fiscal year 2011. While operating margins declined slightly, net profits increased 57% due to a 32% decrease in interest costs. The company maintains a strong order backlog of Rs1,582 crore, providing revenue visibility. Recovery in the industrial sector and opportunities in material handling equipment are expected to drive continued growth for Elecon Engineering.
Elecon Engineering reported a 15% rise in revenue for the first quarter of fiscal year 2011. While operating margins declined slightly, profit grew 57% due to a 32% drop in interest costs. The company has a robust order backlog of Rs1,582 crore, offering high revenue visibility. Going forward, recovery in the industrial sector and opportunities in material handling equipment are expected to drive continued growth for Elecon Engineering.
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.
Hindalco's subsidiary Novelis reported strong results for 4QFY2010. Top-line grew 24.8% year-over-year to US $2.42 billion as sales volumes increased 16.1% year-over-year. Adjusted EBITDA spiked 336% year-over-year to US $231 million. Novelis is focusing on increasing capacity in emerging markets, announcing plans to expand capacity in Brazil by 50% at a cost of US $300 million. Following the expiration of Novelis's metal price ceiling contracts and expected benefits from price increases and cost savings, the report maintains a "Buy" recommendation on Hindalco.
Wipro reported strong financial results for the fourth quarter of fiscal year 2010, with revenue growth of 1.9% quarter-over-quarter and 6.7% year-over-year in rupee terms. Revenue growth was broad-based across business segments and verticals, aided by improved client spending and a recovery in challenged industries. Margins declined slightly due to wage increases and higher spending, but the bottom line grew due to robust other income and lower depreciation costs. Looking ahead, Wipro expects continued revenue growth driven by volume increases and large deals, though margins may be impacted in the current quarter by wage hikes and performance bonuses.
Wipro reported strong financial results for the 4th quarter of fiscal year 2010, with revenue from IT services growing 3.5% quarter-over-quarter and 11% year-over-year. While revenue growth was slightly lower in rupee terms due to currency fluctuations, the company saw broad-based growth across services and verticals driven by improved client spending. Going forward, the company expects to see continued volume-led growth supported by focus on non-linear initiatives. The analyst maintains an "Accumulate" rating on Wipro stock with a target price representing an upside of 13%.
Reliance Communication's quarterly performance failed to meet expectations, with wireless revenue growing only 1.7% compared to the industry average. While the company surpassed 100 million subscribers, its broadband and global business segments saw declines. Profits grew 10.1% due to higher interest earned, but margins fell due to higher network and access costs. Going forward, profitability is expected to come under pressure from increased leverage for capex spending and acquiring 3G licenses.
Jain Irrigation Systems reported financial results for the fourth quarter of fiscal year 2010 that were ahead of estimates. Revenue grew 37% year-over-year driven by strong growth in the micro irrigation systems segment. Net profit increased significantly due to foreign exchange gains, while adjusted net profit grew 40% on higher sales and stable margins. However, margins were slightly lower than the previous year due to higher raw material costs for onions. While growth is expected to continue across segments, the stock price is nearing fair value, leading to a downgrade from "Buy" to "Accumulate."
HT Media reported strong results for 1QFY2011 with revenues growing 22% year-over-year to Rs. 402.8 crore, driven by growth in advertising, circulation, radio, and internet revenues. Operating profits grew 55% to Rs. 78.6 crore due to a 410 basis point expansion in operating margins to 19.5% on the back of a 520 basis point increase in gross margins. Net profits increased 43.5% to Rs. 40.2 crore despite a rise in taxes and fall in other income, aided by top-line growth and lower interest costs. The company continued to see traction in its new businesses such as radio and internet.
1) Bharti Airtel reported a 17.4% year-over-year revenue growth to Rs. 12,231 crore in the first quarter of FY2011, aided by the acquisition of Zain Africa.
2) However, operating margins declined by 518 basis points to 36.1% due to higher sales, general and administrative expenses, network operating costs, and access costs.
3) Net profit declined by 32% year-over-year to Rs. 1,682 crore due to a net loss reported by the African operations, higher interest costs, depreciation, and taxes. Excluding Africa, net profit fell 23% due to margin pressure.
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.
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.
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.
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.
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.
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.
The key points from the document are:
1) Domestic indices tumbled over 1% as global stocks fell on concerns over the spreading eurozone debt crisis.
2) High intraday volatility was seen in the market as it reacted to disappointing industrial production growth data and reports of a cabinet reshuffle.
3) Infosys reported a 4.3% rise in quarterly revenue but margins declined due to wage hikes, while its full-year revenue guidance remained unchanged.
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1. 1QFY2011 Result Update | IT
July 14, 2010
Infosys ACCUMULATE
CMP Rs2,742
Performance Highlights Target Price Rs2,900
(Rs in cr) 1QFY11 4QFY10 %chg (qoq) 1QFY10 %chg (yoy) Investment Period 12 Months
Net Reveneus 6,198 5,944 4.3 5,472 13.3
*EBIT Margins (%) 28.3 30.1 (1.8) 30.0 (1.7) Stock Info
PAT 1488 1,600 (7.0) 1,525 (2.4) Sector IT
Source: Company, Angel Research; IFRS financials in rupee term; Market Cap (Rs cr) 156,860
Beta 0.8
Performance backed by healthy volume growth: Infosys’s consolidated
top-line for 1QFY2011 was in line with our estimates. In rupee terms, top-line 52 Week High / Low 2,911/1,751
grew 4.3% qoq to Rs6,198cr, while in US dollar terms, the growth was 4.8% Avg. Daily Volume 151107
qoq to US $1358mn. The growth was backed by volumes, which were up Face Value (Rs) 5
7.6% qoq, while the blended pricing was lower by 1.6% qoq. However, on
account of the annual wage hike, EBIT margins fell by 178bp qoq to 28.3%, BSE Sensex 17,938
while the PAT declined by 7.0% qoq to Rs1,488cr on account of higher tax Nifty 5,386
rate. Reuters Code INFY.BO
FY2011E guidance revised upwards: Infosys has revised its FY2011E revenue Bloomberg Code INFO@IN
growth guidance from the earlier 16-18% to 19-21% yoy, and EPS growth
from the earlier 9-4.3% to 5-10% yoy in US dollar terms. In rupee terms also,
the revenue growth guidance has been revised upwards from the earlier Shareholding Pattern (%)
9-11% to 16-18% yoy, and EPS growth guidance from the earlier Promoters 16.1
(2.6%)-1.4% to 7.2-11.5% yoy.
MF / Banks / Indian Fls 14.1
Outlook and Valuation: We expect Infosys to register CAGR of 19% in FII / NRIs / OCBs 55.3
top-line over FY2010-12E backed by 17% CAGR in volumes. However, EPS is Indian Public / Others 14.5
likely to register subdued CAGR of 12.6% during the period on account of
lower EBIT margins and increased tax rate. The stock is currently trading at
23.2x FY2011E EPS of Rs118 and 19.9x FY2012E EPS of Rs138. Though
Abs. (%) 3m 1yr 3yr
adverse macro economic factors like the Europe crisis and cross-currency
movements are cause for concern for the IT companies, we believe growth Sensex 0.7 63.6 17.5
will be sustained through volumes with pricing remaining stable. Thus, we Infosys (1.4) 51.8 41.3
have valued the stock at 21x FY2012E earnings, which is at ~25% premium
to Sensex PE of 17x FY2012E earnings (Infosys has traded at an average
premium of ~25% to the Sensex PE during FY2005-10) and maintain our
Accumulate rating on the stock, with a Target Price of Rs2,900.
Key Financials (Consolidated)
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
Net Sales 21,693 22,742 26,916 32,042
% chg 30.0 4.8 18.4 19.0
Net Profit 5,975 6,219 6,735 7,882
% chg 28.2 4.1 8.3 17.0
EBIT Margin (%) 29.6 30.4 29.5 29.0
FDEPS (Rs) 104.7 108.9 118.0 138.0
P/E (x) 26.3 25.2 23.2 19.9
P/BV (x) 8.2 6.5 5.4 4.6
RoE (%) 36.2 28.7 25.5 25.0
RoCE (%) 41.8 36.5 33.9 33.1
Vibha Salvi
EV/Sales (x) 6.7 6.3 5.2 4.2 022 – 4040 3800 Ext: 329
EV/EBITDA (x) 22.7 20.9 17.6 14.6 vibhas.salvi@angeltrade.com
Source: Company, Angel Research
Please refer to important disclosures at the end of this report 1
2. IT | 1Q FY2011Result Update
Exhibit 1: 1QFY2011 Performance (Consolidated, IFRS)
Y/E March (Rs cr) FY2011 FY2010 % chg FY2010 % chg FY2010 FY2009 % chg
1Q 4Q (qoq) 1Q (yoy)
Net Revenues 6,198 5,944 4.3 5,472 13.3 22,742 21,693 4.8
Software Development Expenses 3,648 3,415 6.8 3,139 16.2 13,020 12,535 3.9
Gross Profit 2,550 2,529 0.8 2,333 9.3 9,722 9,158 6.2
SG&A Expenses 795 740 7.4 689 15.4 2,812 2,737 2.7
EBIT 1,755 1,789 (1.9) 1,644 6.8 6,910 6,421 7.6
Other Income 239 252 (5.2) 269 (11.2) 990 473 109.3
Income before Income Taxes 1,994 2,041 (2.3) 1,913 4.2 7,900 6,894 14.6
Tax 506 441 14.7 388 30.4 1,681 919 82.9
Net Income 1,488 1,600 (7.0) 1,525 (2.4) 6,219 5,975 4.1
Diluted EPS (Rs) 26.1 28.0 (7.0) 26.7 (2.5) 108.9 104.7 4.0
Gross Profit Margin (%) 41.1 42.5 42.6 42.7 42.2
EBIT Margin (%) 28.3 30.1 30.0 30.4 29.6
Net Profit Margin (%) 24.0 26.9 27.9 27.3 27.5
Source: Company, Angel Research
Exhibit 2: 1QFY2011 – Actual v/s Angel estimates
(Rs cr) Estimates Actual Variation (%)
Net Revenues 6,129 6,198 1.1
*EBIT Margin (%) 29.9 28.3 (1.5)
PAT 1,550 1488 (4.0)
Source: Company, Angel Research
Broad-based growth across services and verticals driven by volumes
Infosys recorded a 4.3% qoq (13.3% yoy) growth in top-line for 1QFY2011
backed by the 7.6% qoq growth in volumes, despite a 1.6% qoq dip in
blended pricing and negative impact of 0.7% qoq appreciation in the rupee
vis-à-vis the US dollar. The adverse cross-currency movement also restrained
further growth in top-line as the rupee continued to appreciate even against
the euro and GBP by 8.6% and 5.1% respectively, during the quarter.
Exhibit 3: 1QFY2011 - Infosys guidance v/s actual performance
1QFY2011 IFRS Guidance range Performance
In rupee term
Revenues (Rs cr) 5,919-5,963 6,198
EPS (Rs) 24.34-24.79 26.05
In US dollar terms
Revenues (US $mn) 1,330-1,340 1,358
Basic EPADS (US$) 0.55-0.56 0.57
Source: Company, Angel Research
The growth was led by a strong sequential growth of 21.7%, 15.3% and 7.4%
in Product Engineering services (PES), Testing and ADM (application
development and maintenance) services, respectively. Verticals-wise, Infosys
witnessed strong growth of 8.2% in BFSI led by the 13.8% growth recorded in
the Insurance domain, while the Energy & Utilities and Retail verticals grew by
7.9% and 5.9%, respectively.
July 14, 2010 2
3. IT | 1Q FY2011Result Update
Exhibit 4: Services-wise revenue break-up
Particulars (Rs cr) 1QFY11 4QFY10 1QFY10 % chg % chg
qoq yoy
Application Development &
2,529 2,354 2,326 7.4 8.7
Maintenance
Development 1,047 999 1,056 4.9 (0.8)
Maintenance 1,481 1,355 1,270 9.3 16.7
Business Process
353 369 334 (4.1) 5.8
Management
Consulting and Package
1,543 1,545 1,335 (0.1) 15.6
Implementation
Infrastructure Management 428 428 361 (0.1) 18.4
Testing Services 452 392 339 15.3 33.4
Product Engineering Services 130 107 131 21.7 (0.9)
Systems Integration 260 267 208 (2.7) 25.2
Others 211 184 219 14.4 (3.7)
Total services 5,907 5,647 5,253 4.6 12.4
Products 291 297.2 219 (2.0) 33.1
Total revenues 6,198 5,944 5,472 4.3 13.3
Source: Company, Angel Research
Exhibit 5: Vertical-wise revenue break-up
Particulars (Rs cr) 1QFY11 4QFY10 1QFY10 % chg % chg
qoq yoy
BFSI 2,237 2,069 1,806 8.2 23.9
Insurance 521 458 389 13.8 34.0
Banking & Financial Services 1,717 1,611 1,417 6.6 21.1
Manufacturing 1,209 1,201 1,122 0.7 7.7
Retail 818 773 722 5.9 13.3
Telecom 874 909 925 (3.9) (5.5)
Energy & Utilities 372 345 312 7.9 19.2
Transportation & logistics 112 107 126 4.3 (11.4)
Services 298 291 268 2.1 11.0
Others 279 250 192 11.7 45.6
Total revenues 6,198 5,944 5,472 4.3 13.3
Source: Company, Angel Research
Geography-wise, strong growth was delivered by North America, India and
Rest of World, which grew by 6.2%, 26.6% and 11.6% respectively, on a qoq
basis. However, the 5.9% qoq decline in revenues from Europe on account of
the ongoing crisis restrained growth.
Exhibit 6: Geography-wise revenue break-up
Region (Rs cr) 1QFY11 4QFY10 1QFY10 % chg % chg
qoq yoy
North America 4,171 3,929 3,540 6.2 17.8
Europe 1,258 1,337 1,352 (5.9) (6.9)
India 105 83 49 26.6 113.9
Rest of the world 663 594 531 11.6 24.9
Total revenues 6,198 5,944 5,472 4.3 13.3
Source: Company, Angel Research
July 14, 2010 3
4. IT | 1Q FY2011Result Update
The company added 38 new clients during the quarter, of which 6 were from
banking product Finacle, taking the total active clients to 590. The company
added two US $100mn clients in 1QFY2011. The company also closed couple
of large deals during the quarter whereas few transformational deals are in the
pipeline. The Top-10 and -25 client accounts witnessed qoq growth of 6.6%
and 5.2% respectively, while repeat business contributed 99.4% of the revenues
compared to 95.4% in 4QFY2010.
Sustained rupee appreciation across currencies, salary hikes impact margins
During 1QFY2011, Infosys recorded a 178bp qoq (173bp yoy) contraction in
EBIT margin, of which ~ 300bp impact came from negative impact of
cross-currency movement and annual salary hikes effective during the quarter.
However, the 160bp qoq increase in utilisation to 78.7% excluding trainees
(utilisation including trainees was up by 370bp at 73%) during the quarter had
a positive impact of ~100bp on the margins.
In terms of operational costs, the negative impact on margins was on account
of the 140bp increase in employee costs, as the company incurred US $12mn
on visa costs during the quarter in addition to the salary hikes, while the
General & Administration expenses also went up by 50bp qoq.
Lower operational profitability, higher tax restrains bottom-line growth
Infosys reported 5.2% qoq (11.2% yoy) decline in other income mainly on
account of the forex loss of Rs81cr v/s gain of Rs97cr in 1QFY10. The tax rate
during the quarter also went up from 21.6% in 4QFY2010 to 25.4% in
1QFY2011 as ~80% of profits (compared to 70% taxable earlier) would come
under taxable income as the tax benefits availed earlier now phase out. Thus,
lower operational profitability and other income coupled with higher tax outgo
impacted bottom-line, which fell by 7% qoq (2.4% yoy).
Gross addition of 8,859 employees; High attrition
Infosys added a gross of 8,859 employees in 1QFY2011, while net additions
were 1,026 (vis-à-vis 3,914 employees in 4QFY2010). The company has
114,822 employees on its rolls as of 1QFY2011, and has revised upwards its
gross addition guidance from earlier 30,000 to 36,000 employees as on
1QFY11 expecting strong volume growth in FY2011E. The attrition rate
however stood high at 15.8% in 1QFY2011 on account of the overall
buoyancy in the job market with a strong economic recovery.
July 14, 2010 4
5. IT | 1Q FY2011Result Update
Exhibit 7: Quarterly attrition trend
Source: Company, Angel Research
Strong 2QFY2011E guidance
Although the company registered a subdued performance for 1QFY2011, it
has given a strong revenue growth guidance of 6-7% for 2QFY2011E, in
rupee terms backed by growth in volumes. The company also plans to make
gross employee addition of 14,000 in 2QF20Y11E. Margins are expected to
improve compared to 1QFY2011 as there will be no impact of the annual
wage hike, which has already happened in 1QFY2011. The company has
guided for 5-7% qoq growth in EPS.
FY2011E guidance revised upwards
Infosys has revised upwards FY2011E revenue growth guidance in US dollar
terms ranging between 19 - 21% yoy, and EPS growth to range between 5.2 -
9.6% yoy. In rupee terms, the revenue guidance ranges between Rs26,441 -
26,885cr, a yoy growth of 16.3 - 18.2%, and EPS ranges between Rs112.2 -
116.7, implying yoy growth of 7.2 -11.5%.
The company’s strong upward guidance is based on the robust client
feedback with improvement in the demand environment and infusion of
36,000 gross employees to deliver strong volume-backed growth with pricing
expected to remain stable.
Exhibit 8: 2QFY2011E, FY2011E guidance
Guidance 2QFY11E FY2011E Revised FY2011E
IFRS As on 4QFY10 As on 1QFY11
Revenues (Rs cr) 6,563-6,626 24,796-25,239 26,441-26,885
EPS (Rs) 27.42-27.95 106.82-111.28 112.21-116.73
IFRS
Revenues (US $bn) 1.41-1.43 5.57-5.67 5.72-5.81
Basic EPADS (US$) 0.59-0.60 2.40-2.50 2.42-2.52
Source: Company, Angel Research
July 14, 2010 5
6. IT | 1Q FY2011Result Update
Investment Arguments
Strong growth in US and emerging geographies to combat Europe crisis:
Though Europe continues to be a spoilt sport for the Indian IT industry till the
concerns wear out, some of the other levers for the company’s growth are the
recovery in the IT spend from the US and emerging geographies. The
company also expects to get increasing wallet share from its existing clients
and is witnessing improvement in IT spends more on offshore. Moreover to
combat the European concerns the company plans to proactively increase
investments in creating capabilities and hence plans for strong manpower
intake in FY2011. We expect growth to remain broad-based with key verticals
like BFSI, energy and utilities and high-margin services like consulting and
package implementation are expected to do well.
Strong volume led growth with stable pricing to maintain profitability
Though the cross-currency movement remains a concern, we expect the
company’s short-term hedging policy to arrest its impact on operational
profitability to a large extent. However, the increasing attrition rate is a cause
for concern. Hence, we expect employee cost to move up going forward to
retain the best of the talents, as the job opportunities are coming back with
buoyancy in the overall economy. However, on the back of strong
volume-backed growth and stable pricing, we believe that the company will
maintain the EBIT margins albeit in a narrow band going forward.
Outlook and Valuation
We expect Infosys to register CAGR of 19% in top-line over FY2010-12E
backed by 17% CAGR in volumes. However, EPS is likely to register subdued
CAGR of 12.6% during the period on account of lower EBIT margins and
increased tax rate. The stock is currently trading at 23.7x FY2011E EPS of
Rs118 and 20x FY2012E EPS of Rs138. Though adverse macro economic
factors like the Europe crisis and cross-currency movements are cause for
concern for the IT companies, we believe growth will be sustained through
volumes with pricing remaining stable. Thus, we have valued the stock at 21x
FY2012E earnings, which is at ~25% premium to Sensex PE of 17x FY2012E
earnings (Infosys has traded at an average premium of ~25% to the Sensex
PE during FY2005-10) and maintain our Accumulate rating on the stock, with
a Target Price of Rs2,900.
July 14, 2010 6
7. IT | 1Q FY2011Result Update
Exhibit 9: Key Assumptions
FY2011E FY2012E
Volume growth 18.6 15.2
Pricing growth 1 2
Revenue growth (in US $ terms) 20.4 17.9
USD-INR rate (realised) 46.5 47.0
Revenue growth (in Re terms) 18.4 19
Employee addition (Net) 13,639 12,000
EBIT margin (%) 29.5 29.0
Tax rate (%) 25 25
EPS growth (%) 8.3 17
Source: Company, Angel Research
Exhibit 10: Change in Estimates
FY2011E FY2012E
Parameter Earlier Revised Variation Earlier Revised Variation
(Rs cr) Estimates Estimates (%) Estimates Estimates (%)
Net Revenues 25,524 26,916 5.5 31,071 32,042 3.1
EBIT (excl.
7,758 7,951 2.5 9,351 9,277 (0.8)
other income)
Other Income 1,166 1,029 (11.7) 1,476 1,233 (16.5)
PBT 8,924 8,980 0.6 10,827 10,510 (2.9)
Tax 2,231 2,245 0.6 2,815 2,627 (6.7)
PAT 6,693 6,735 0.6 8,012 7,882 (1.6)
Source: Company, Angel Research
In line with the upward revision in Infosys’s guidance for FY2011E and
expected higher infusion of gross manpower, we have also upgraded our
FY2011E and FY2012E top-line estimates. We however, expect other income
to be lower on account of the expected unfavourable cross-currency
movement. We estimate PAT to be slightly higher in FY2011E compared to
our earlier estimates, as volume growth would take care of lower margins.
However, PAT in FY2012E would be slightly lower than our earlier estimates,
as margins are expected to dip with the rise in employee costs to arrest higher
attrition.
Exhibit 11: Angel EPS forecast v/s consensus
Year (%) Angel forecast Bloomberg consensus Variation
FY2011E 118.0 121.7 (3.0)
FY2012E 138.0 144.9 (4.8)
Source: Company, Angel Research
July 14, 2010 7
12. IT | 1Q FY2011Result Update
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Disclosure of Interest Statement (Company name) Infosys
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 14, 2010 12