The Indian government increased the price of natural gas produced from nomination blocks more than twofold from Rs3.20/scm to Rs6.82/scm. In a related move, the cabinet approved marketing margins of Rs200/scm for GAIL on APM gas marketing volumes. This brings APM gas prices in line with KG-D6 gas prices and is expected to benefit upstream companies like ONGC and OIL through increased revenues and profits. However, city gas distribution companies may be negatively impacted due to higher gas costs. The moves aim to establish a uniform domestic gas pricing policy.
Jagran Prakashan has approved acquiring the print media business of Mid-day Multimedia via a share swap that values the business at approximately Rs175 crore. This deal is expected to be earnings accretive for Jagran Prakashan and boost its advertising revenues due to bundling effects from combined offerings. The acquisition will lead to around a 5% dilution in Jagran Prakashan. The analyst maintains a buy recommendation on Jagran Prakashan with a target price of Rs160.
The Indian stock market gained over the week, with the BSE Sensex and NSE Nifty indices ending higher by 2.5% and 2.7% respectively. Most sectoral indices also closed in green, with the BSE Realty index gaining the most at 4.1%. Markets gained in the latter half of the week as world stocks rose on signals of support for the euro zone from China. Mutual funds saw a net purchase of equity worth Rs. 400 crore for the week. Piramal Healthcare sold its domestic formulations business for US$ 3.72 billion, a significant deal in the Indian pharmaceutical industry. The report also provides analysis and recommendations on Bhushan Steel and Jagran P
The Indian stock markets extended their gains during the week, with the Sensex and Nifty ending higher by 1% each. The BSE metal index gained 4.1% over the previous week, outperforming the Sensex by 3.1%. Automotive Axles reported a 198% year-over-year increase in net sales to Rs196 crore for the third quarter of fiscal year 2010, above Angel's estimate, aided by a recovery in commercial vehicle volumes. Angel has revised its estimates upward and maintains a Buy rating on Automotive Axles with a target price of Rs578.
The RBI raised the repo rate by 25 basis points to 5.5% and the reverse repo rate by 25 basis points to 4.0% to anchor inflationary expectations as various components of the WPI index continue to see price increases. While interest rates are expected to rise further, credit demand is likely to sustain above 19% growth and not significantly impact economic growth. HMVL is issuing shares through an IPO to raise Rs. 270 crores to expand operations by setting up new publishing units and upgrading equipment. The company has a strong position in regional print markets and is expected to benefit from industry growth.
The market ended the week mostly flat, with the Sensex and Nifty gaining 0.02% and 0.1% respectively. Mid-cap and small-cap indices outperformed, rising 1.5% and 1.6%. Oil and gas stocks gained the most, with the BSE Oil and Gas Index rising 3%. Foreign institutional investors were net buyers of Indian stocks. Key points from the document include an analysis of Sun TV Network and recommendations to buy the stock, an update on Indraprastha Gas with a revised target price and upgrade to buy, and an event note on Reliance Industries maintaining a buy rating.
The document provides a weekly market review covering the period of May 28 - June 4, 2010. It summarizes that the Indian stock market extended its gains during the week, with both major indices ending higher, despite volatility in sessions. Most sectoral indices ended higher, with the exception of metals and realty. Within autos, Maruti and M&M outperformed on strong sales, helping the auto index gain the most. The review also covers FII/FPI flows, mutual fund activity, global market performance and initiates coverage on United Phosphorus with a buy rating.
Reliance Industries (RIL) has announced the acquisition of Infotel Broadband Services, which holds pan-India wireless broadband licenses. RIL will invest Rs. 4,800 crore for a 95% stake in Infotel. This deal will allow RIL to enter the broadband internet space and opens up new growth avenues. However, rolling out wireless broadband across India will be a long gestation project. The deal may be marginally dilutive to RIL's earnings in the short-term. Analysts maintain a Buy rating on RIL with a target price of Rs. 1,260, citing its undervaluation and strong long-term outlook.
The document provides a weekly market review for the period of July 2-9, 2010. It summarizes that the Indian stock markets bounced back during the week with both key indices ending higher. Most sectors gained with the IT and Realty indices seeing the largest gains. It also provides details on FII flows, mutual fund activity and global market performance. Specific news on RBI raising rates, real estate sector gains and updates on key companies like Alembic are mentioned. The focus section provides an analysis of mid-cap steel companies in Chhattisgarh and recommends top picks based on valuations.
Jagran Prakashan has approved acquiring the print media business of Mid-day Multimedia via a share swap that values the business at approximately Rs175 crore. This deal is expected to be earnings accretive for Jagran Prakashan and boost its advertising revenues due to bundling effects from combined offerings. The acquisition will lead to around a 5% dilution in Jagran Prakashan. The analyst maintains a buy recommendation on Jagran Prakashan with a target price of Rs160.
The Indian stock market gained over the week, with the BSE Sensex and NSE Nifty indices ending higher by 2.5% and 2.7% respectively. Most sectoral indices also closed in green, with the BSE Realty index gaining the most at 4.1%. Markets gained in the latter half of the week as world stocks rose on signals of support for the euro zone from China. Mutual funds saw a net purchase of equity worth Rs. 400 crore for the week. Piramal Healthcare sold its domestic formulations business for US$ 3.72 billion, a significant deal in the Indian pharmaceutical industry. The report also provides analysis and recommendations on Bhushan Steel and Jagran P
The Indian stock markets extended their gains during the week, with the Sensex and Nifty ending higher by 1% each. The BSE metal index gained 4.1% over the previous week, outperforming the Sensex by 3.1%. Automotive Axles reported a 198% year-over-year increase in net sales to Rs196 crore for the third quarter of fiscal year 2010, above Angel's estimate, aided by a recovery in commercial vehicle volumes. Angel has revised its estimates upward and maintains a Buy rating on Automotive Axles with a target price of Rs578.
The RBI raised the repo rate by 25 basis points to 5.5% and the reverse repo rate by 25 basis points to 4.0% to anchor inflationary expectations as various components of the WPI index continue to see price increases. While interest rates are expected to rise further, credit demand is likely to sustain above 19% growth and not significantly impact economic growth. HMVL is issuing shares through an IPO to raise Rs. 270 crores to expand operations by setting up new publishing units and upgrading equipment. The company has a strong position in regional print markets and is expected to benefit from industry growth.
The market ended the week mostly flat, with the Sensex and Nifty gaining 0.02% and 0.1% respectively. Mid-cap and small-cap indices outperformed, rising 1.5% and 1.6%. Oil and gas stocks gained the most, with the BSE Oil and Gas Index rising 3%. Foreign institutional investors were net buyers of Indian stocks. Key points from the document include an analysis of Sun TV Network and recommendations to buy the stock, an update on Indraprastha Gas with a revised target price and upgrade to buy, and an event note on Reliance Industries maintaining a buy rating.
The document provides a weekly market review covering the period of May 28 - June 4, 2010. It summarizes that the Indian stock market extended its gains during the week, with both major indices ending higher, despite volatility in sessions. Most sectoral indices ended higher, with the exception of metals and realty. Within autos, Maruti and M&M outperformed on strong sales, helping the auto index gain the most. The review also covers FII/FPI flows, mutual fund activity, global market performance and initiates coverage on United Phosphorus with a buy rating.
Reliance Industries (RIL) has announced the acquisition of Infotel Broadband Services, which holds pan-India wireless broadband licenses. RIL will invest Rs. 4,800 crore for a 95% stake in Infotel. This deal will allow RIL to enter the broadband internet space and opens up new growth avenues. However, rolling out wireless broadband across India will be a long gestation project. The deal may be marginally dilutive to RIL's earnings in the short-term. Analysts maintain a Buy rating on RIL with a target price of Rs. 1,260, citing its undervaluation and strong long-term outlook.
The document provides a weekly market review for the period of July 2-9, 2010. It summarizes that the Indian stock markets bounced back during the week with both key indices ending higher. Most sectors gained with the IT and Realty indices seeing the largest gains. It also provides details on FII flows, mutual fund activity and global market performance. Specific news on RBI raising rates, real estate sector gains and updates on key companies like Alembic are mentioned. The focus section provides an analysis of mid-cap steel companies in Chhattisgarh and recommends top picks based on valuations.
The document provides a weekly market review for the period ending September 9, 2010. It notes that the BSE Sensex and Nifty indices hit 31-month highs and gained over 3% and 2.9% respectively for the week. The metal sector index gained the most at 5.1% led by Tata Steel rising 9.7%. Foreign institutional investors were net buyers during the week. It also provides updates on mutual fund activity and global market performance. The article re-initiates coverage on Phillips Carbon Black with a buy rating and target price of Rs 270, noting it is well positioned to benefit from rising tyre demand. It also provides an event update on the favorable verdict for Sun Pharma in its T
The key Indian indices surged by around 1.7% after China announced it would allow more flexibility in its currency. Metals and realty stocks rallied. The RBI directed banks to make NPA compromises in a transparent manner and express concerns about differing settlement amounts. Bharti Airtel plans to invest $100 million in expanding its network in Uganda over the next two years following its acquisition of Zain's Africa assets.
Key points from the document:
1) Indian stock indices fell to their lowest levels in over 3 months as global stocks slumped due to tensions in Korea, concerns over global debt, and fears of sovereign defaults. The Sensex and Nifty closed down 2.7% and 2.8% respectively.
2) Grasim will demerge its cement business into a subsidiary called Samruddhi. Grasim shareholders will receive a 35% stake in Samruddhi.
3) Cadila received a milestone payment of Rs. 47.4 crore from Abbott as part of a strategic alliance to supply 24 branded generic drugs in 15 emerging markets.
The Indian stock market ended marginally higher for the week, with the BSE Sensex and NSE Nifty gaining 0.1% and 0.2% respectively. The BSE mid-cap and small-cap indices outperformed, gaining 1.5% and 1.6%. The realty index gained the most at 6.6%, outperforming the Sensex. Nestle reported 19% annual top-line growth driven by 17.9% volume growth domestically and 29.3% export volume growth. State Bank of India's quarterly profit grew 25.1% annually and 56.1% quarterly, exceeding estimates. Tata Steel's quarterly revenue grew 16.8% annually
The Indian stock market ended higher for the week, with the Sensex and Nifty gaining 1.5% and 1.3% respectively. The BSE IT index outperformed, gaining 3% on strong results from TCS and Wipro. ICICI Bank's quarterly profits rose 16.8%, in line with estimates. Alembic's quarterly results were below expectations due to lower API exports. Aditya Birla Nuvo is recommended as a buy, valued using SOTP with a 20% conglomerate discount and target price of Rs1,166.
The Indian stock market indices gained slightly to reach their highest closing levels in over 32 months. Key sectors like realty, capital goods and metals rose, while FMCG stocks declined. The market pared some gains in afternoon trade due to profit booking. Cement prices are expected to rise in October in some regions. L&T received a Rs1,610 crore order, and M&M will raise vehicle prices starting October 1.
The key Indian stock indices turned negative late in the trading session as European stocks gave up gains and US futures fell. Banking, metals, auto and realty stocks reversed early gains. Two Indian companies reported acquisitions in line with their growth strategies, while one company secured an annuity road project. Analyst reviews of company results were provided.
The Indian stock markets declined significantly on May 5th, with the BSE Sensex falling 1.4% and the NSE Nifty dropping 1.39%, amid rate hike concerns after the RBI increased interest rates. US markets also fell over 1% as commodities declined sharply. Asian markets opened lower the next day following the steep fall in commodities. Key corporate news included Cipla reporting lower annual profits, ONGC postponing its FPO, and Bharti Airtel allocating large capital expenditures.
The key Indian stock market indices surged on the first day of the new financial year, snapping a two-day slide due to broad-based buying. IT stocks rallied after recent declines while banking stocks gained on fresh buying. However, manufacturing growth slowed in the previous month. The Sensex and Nifty ended lower by 0.9% and 0.8% respectively, while mid-cap and small-cap indices closed higher.
- The key Indian indices (Sensex and Nifty) declined by 0.4% and 0.5% respectively, tracking subdued European markets and concerns over rising food inflation in India.
- Banking, realty and oil & gas stocks led the declines, while HUL, ONGC and ITC gained 1-2%. Midcap stocks like Dalmia Cement rose 5-9% while losses were seen in Blue Star and Indusind Bank.
- The article provides analysis on recent company news and IPOs, and recommends a neutral view on the Ashoka Buildcon IPO and subscribe view on the Tecpro Systems IPO.
The key points from the document are:
1) Indian stock markets opened lower but recovered most losses to end the day with modest gains, as buying was seen in metal and banking stocks.
2) Gateway Distriparks won a tender for a 2.58 hectare plot that will help expand its container handling capacity.
3) The document provides analysis and commentary on recent company news, market trends, and investment recommendations.
The document provides a market commentary and analysis for Indian and global markets for the period of August 30th to September 1st, 2011. Some key points:
- Indian markets rose over 1% for the week led by metals, banking and IT stocks. Mid and small caps also saw buying.
- GDP growth for the first quarter of FY2012 came in at 7.7%, lower than estimates.
- US stocks fell over the period on weak economic data while Asian markets also declined ahead of US jobs reports.
- Key corporate news included Maruti bringing forward production at a new plant and Dr Reddy's launching a new drug in the US market.
- Commodity prices were mixed with Brent
The Indian stock markets extended their gains during the week, closing above 18,000 on the BSE index and boosting investor sentiment. The BSE metals index gained the most at 4.1% led by gains in Tata Steel, SAIL, and Jindal Steel. In the coming RBI monetary policy, the focus will be on controlling inflation using policy tools, and the RBI is expected to hike repo and reverse repo rates by 25 basis points each.
The weekly market review document reported the following:
1) Markets ended the week lower, with the Sensex and Nifty closing down 2.2% each, amid sessions of volatility due to negative global cues.
2) The realty index fell the most, down 8.5%, with top losers including Sobha Developers, HDIL, Unitech, DLF, and Anant Raj Industries.
3) PTC India Financial Services received infrastructure financial company status from the RBI, allowing it to have higher exposure limits.
- Godrej Consumer Products (GCPL) has agreed to acquire the remaining 51% stake in its joint venture Godrej Sara Lee (GSL) for Rs1,050 crore. This values GSL at Rs2,065 crore.
- The acquisition will help GCPL become one of the strongest players in the home and personal care sector in India. Along with a previous acquisition in Indonesia, it will make GCPL the second largest household insecticide player in Asia outside Japan.
- The deal is priced attractively at 15 times GSL's FY2010 earnings and 2.1 times its sales. Factoring in a potential equity dilution of 10.2% to fund the deal, the analysts believe the acquisition
Lakshmi Machine Works dominates the Indian textile machinery sector, providing world-class products at low prices. It has a large order backlog of Rs3,300 crore providing strong revenue visibility. The company is well positioned to benefit from growth in the Indian textile industry. The analyst initiates coverage with a Buy rating and target price of Rs2,819, valuing the stock at a forward P/E of 15x.
3i Infotech reported subdued 1QFY2011 results with 1.4% quarter-on-quarter revenue growth. While EBITDA margins dipped slightly, the company returned to net profit versus a loss in the previous quarter. The company maintained its FY2011 revenue guidance of 11-14% growth year-on-year. It redefined its business segments, which is expected to boost integrated product and service offerings and enhance value. While initiatives may impact margins, the analyst maintains a Buy recommendation with a revised target price of Rs. 100 based on expected 14% revenue CAGR and 6.4% profit CAGR through FY2012.
The weekly market review summarizes activity in the Indian stock market for the week ending April 30, 2010. The key points are:
- The BSE Sensex and NSE Nifty ended the week lower by 0.8% and 0.5% respectively, amid high volatility from F&O rollover.
- The BSE Oil & Gas index underperformed, losing 1.7% for the week led by a 5% fall in Reliance Industries following lower than expected results.
- Mutual fund activity saw net equity outflows of Rs. 124 crore for the week, while FII activity showed net inflows of Rs. 721 crore.
The key points from the document are:
1) Indian stock indices fell to their lowest levels in over 3 months as global stocks slumped due to tensions in Korea, concerns over global debt, and fears of sovereign defaults. The Sensex and Nifty closed down 2.7% and 2.8% respectively.
2) In company news, Grasim will demerge its cement business to Samruddhi today. Cadila received a milestone payment from Abbott for a supply deal. Marico acquired a skin care business in Singapore.
3) Results were mixed with GIPCL, HUL, and NCC above estimates while JK Tyres was below expectations.
Key points from the document:
1) Indian stock indices fell to their lowest levels in over 3 months as global stocks slumped due to tensions in Korea, concerns over global debt, and fears of sovereign defaults. The Sensex fell 2.7% and the Nifty fell 2.8%.
2) Grasim will demerge its cement business into a subsidiary called Samruddhi today. Grasim shareholders will receive shares in Samruddhi.
3) Cadila received a milestone payment of Rs. 47.4 crore from Abbott as part of a strategic alliance to supply 24 branded generic drugs across 15 emerging markets.
The document provides a weekly market review for the period ending September 9, 2010. It notes that the BSE Sensex and Nifty indices hit 31-month highs and gained over 3% and 2.9% respectively for the week. The metal sector index gained the most at 5.1% led by Tata Steel rising 9.7%. Foreign institutional investors were net buyers during the week. It also provides updates on mutual fund activity and global market performance. The article re-initiates coverage on Phillips Carbon Black with a buy rating and target price of Rs 270, noting it is well positioned to benefit from rising tyre demand. It also provides an event update on the favorable verdict for Sun Pharma in its T
The key Indian indices surged by around 1.7% after China announced it would allow more flexibility in its currency. Metals and realty stocks rallied. The RBI directed banks to make NPA compromises in a transparent manner and express concerns about differing settlement amounts. Bharti Airtel plans to invest $100 million in expanding its network in Uganda over the next two years following its acquisition of Zain's Africa assets.
Key points from the document:
1) Indian stock indices fell to their lowest levels in over 3 months as global stocks slumped due to tensions in Korea, concerns over global debt, and fears of sovereign defaults. The Sensex and Nifty closed down 2.7% and 2.8% respectively.
2) Grasim will demerge its cement business into a subsidiary called Samruddhi. Grasim shareholders will receive a 35% stake in Samruddhi.
3) Cadila received a milestone payment of Rs. 47.4 crore from Abbott as part of a strategic alliance to supply 24 branded generic drugs in 15 emerging markets.
The Indian stock market ended marginally higher for the week, with the BSE Sensex and NSE Nifty gaining 0.1% and 0.2% respectively. The BSE mid-cap and small-cap indices outperformed, gaining 1.5% and 1.6%. The realty index gained the most at 6.6%, outperforming the Sensex. Nestle reported 19% annual top-line growth driven by 17.9% volume growth domestically and 29.3% export volume growth. State Bank of India's quarterly profit grew 25.1% annually and 56.1% quarterly, exceeding estimates. Tata Steel's quarterly revenue grew 16.8% annually
The Indian stock market ended higher for the week, with the Sensex and Nifty gaining 1.5% and 1.3% respectively. The BSE IT index outperformed, gaining 3% on strong results from TCS and Wipro. ICICI Bank's quarterly profits rose 16.8%, in line with estimates. Alembic's quarterly results were below expectations due to lower API exports. Aditya Birla Nuvo is recommended as a buy, valued using SOTP with a 20% conglomerate discount and target price of Rs1,166.
The Indian stock market indices gained slightly to reach their highest closing levels in over 32 months. Key sectors like realty, capital goods and metals rose, while FMCG stocks declined. The market pared some gains in afternoon trade due to profit booking. Cement prices are expected to rise in October in some regions. L&T received a Rs1,610 crore order, and M&M will raise vehicle prices starting October 1.
The key Indian stock indices turned negative late in the trading session as European stocks gave up gains and US futures fell. Banking, metals, auto and realty stocks reversed early gains. Two Indian companies reported acquisitions in line with their growth strategies, while one company secured an annuity road project. Analyst reviews of company results were provided.
The Indian stock markets declined significantly on May 5th, with the BSE Sensex falling 1.4% and the NSE Nifty dropping 1.39%, amid rate hike concerns after the RBI increased interest rates. US markets also fell over 1% as commodities declined sharply. Asian markets opened lower the next day following the steep fall in commodities. Key corporate news included Cipla reporting lower annual profits, ONGC postponing its FPO, and Bharti Airtel allocating large capital expenditures.
The key Indian stock market indices surged on the first day of the new financial year, snapping a two-day slide due to broad-based buying. IT stocks rallied after recent declines while banking stocks gained on fresh buying. However, manufacturing growth slowed in the previous month. The Sensex and Nifty ended lower by 0.9% and 0.8% respectively, while mid-cap and small-cap indices closed higher.
- The key Indian indices (Sensex and Nifty) declined by 0.4% and 0.5% respectively, tracking subdued European markets and concerns over rising food inflation in India.
- Banking, realty and oil & gas stocks led the declines, while HUL, ONGC and ITC gained 1-2%. Midcap stocks like Dalmia Cement rose 5-9% while losses were seen in Blue Star and Indusind Bank.
- The article provides analysis on recent company news and IPOs, and recommends a neutral view on the Ashoka Buildcon IPO and subscribe view on the Tecpro Systems IPO.
The key points from the document are:
1) Indian stock markets opened lower but recovered most losses to end the day with modest gains, as buying was seen in metal and banking stocks.
2) Gateway Distriparks won a tender for a 2.58 hectare plot that will help expand its container handling capacity.
3) The document provides analysis and commentary on recent company news, market trends, and investment recommendations.
The document provides a market commentary and analysis for Indian and global markets for the period of August 30th to September 1st, 2011. Some key points:
- Indian markets rose over 1% for the week led by metals, banking and IT stocks. Mid and small caps also saw buying.
- GDP growth for the first quarter of FY2012 came in at 7.7%, lower than estimates.
- US stocks fell over the period on weak economic data while Asian markets also declined ahead of US jobs reports.
- Key corporate news included Maruti bringing forward production at a new plant and Dr Reddy's launching a new drug in the US market.
- Commodity prices were mixed with Brent
The Indian stock markets extended their gains during the week, closing above 18,000 on the BSE index and boosting investor sentiment. The BSE metals index gained the most at 4.1% led by gains in Tata Steel, SAIL, and Jindal Steel. In the coming RBI monetary policy, the focus will be on controlling inflation using policy tools, and the RBI is expected to hike repo and reverse repo rates by 25 basis points each.
The weekly market review document reported the following:
1) Markets ended the week lower, with the Sensex and Nifty closing down 2.2% each, amid sessions of volatility due to negative global cues.
2) The realty index fell the most, down 8.5%, with top losers including Sobha Developers, HDIL, Unitech, DLF, and Anant Raj Industries.
3) PTC India Financial Services received infrastructure financial company status from the RBI, allowing it to have higher exposure limits.
- Godrej Consumer Products (GCPL) has agreed to acquire the remaining 51% stake in its joint venture Godrej Sara Lee (GSL) for Rs1,050 crore. This values GSL at Rs2,065 crore.
- The acquisition will help GCPL become one of the strongest players in the home and personal care sector in India. Along with a previous acquisition in Indonesia, it will make GCPL the second largest household insecticide player in Asia outside Japan.
- The deal is priced attractively at 15 times GSL's FY2010 earnings and 2.1 times its sales. Factoring in a potential equity dilution of 10.2% to fund the deal, the analysts believe the acquisition
Lakshmi Machine Works dominates the Indian textile machinery sector, providing world-class products at low prices. It has a large order backlog of Rs3,300 crore providing strong revenue visibility. The company is well positioned to benefit from growth in the Indian textile industry. The analyst initiates coverage with a Buy rating and target price of Rs2,819, valuing the stock at a forward P/E of 15x.
3i Infotech reported subdued 1QFY2011 results with 1.4% quarter-on-quarter revenue growth. While EBITDA margins dipped slightly, the company returned to net profit versus a loss in the previous quarter. The company maintained its FY2011 revenue guidance of 11-14% growth year-on-year. It redefined its business segments, which is expected to boost integrated product and service offerings and enhance value. While initiatives may impact margins, the analyst maintains a Buy recommendation with a revised target price of Rs. 100 based on expected 14% revenue CAGR and 6.4% profit CAGR through FY2012.
The weekly market review summarizes activity in the Indian stock market for the week ending April 30, 2010. The key points are:
- The BSE Sensex and NSE Nifty ended the week lower by 0.8% and 0.5% respectively, amid high volatility from F&O rollover.
- The BSE Oil & Gas index underperformed, losing 1.7% for the week led by a 5% fall in Reliance Industries following lower than expected results.
- Mutual fund activity saw net equity outflows of Rs. 124 crore for the week, while FII activity showed net inflows of Rs. 721 crore.
The key points from the document are:
1) Indian stock indices fell to their lowest levels in over 3 months as global stocks slumped due to tensions in Korea, concerns over global debt, and fears of sovereign defaults. The Sensex and Nifty closed down 2.7% and 2.8% respectively.
2) In company news, Grasim will demerge its cement business to Samruddhi today. Cadila received a milestone payment from Abbott for a supply deal. Marico acquired a skin care business in Singapore.
3) Results were mixed with GIPCL, HUL, and NCC above estimates while JK Tyres was below expectations.
Key points from the document:
1) Indian stock indices fell to their lowest levels in over 3 months as global stocks slumped due to tensions in Korea, concerns over global debt, and fears of sovereign defaults. The Sensex fell 2.7% and the Nifty fell 2.8%.
2) Grasim will demerge its cement business into a subsidiary called Samruddhi today. Grasim shareholders will receive shares in Samruddhi.
3) Cadila received a milestone payment of Rs. 47.4 crore from Abbott as part of a strategic alliance to supply 24 branded generic drugs across 15 emerging markets.
The key Indian stock indices declined on October 20, 2010, with the Sensex and Nifty falling 0.9% and 0.8% respectively, as IT stocks weakened due to concerns over Apple's iPad sales. Banking stocks also declined amid volatility. However, mid and small cap indices gained 0.2%. In company news, Larsen & Toubro won a Rs. 1,449 crore order, and HDFC Bank reported a 32.7% rise in Q2 profit in line with estimates.
The Indian stock market ended lower for the week, with the Sensex and Nifty declining by 1.4% and 1.5% respectively. The BSE mid-cap and small-cap indices also fell but outperformed their large-cap counterparts. The BSE Bankex index outperformed the Sensex, gaining 0.4% for the week. RBI raised repo and reverse repo rates by 25bp and 50bp respectively to 4.5% and 5.75%. SKS Microfinance offers exposure to India's large microfinance opportunity through a strong pan-India network and focus on risk management.
The key Indian stock market indices edged higher in early trade but then reversed gains and slumped later in the day. The Sensex and Nifty closed down 0.8% and 0.7% respectively due to weak global cues. Tata Motors gained on strong quarterly results while other frontline stocks like Tata Steel and HDFC declined. Midcap stocks like Tata Investment and United Breweries rose over 5% while Educomp and IVRCL Infra lost over 5%. The RBI released a discussion paper proposing higher capital requirements and foreign investment caps for new private banks. Dishman Pharma and Indraprastha Gas are expected to report quarterly growth while results for Ranbaxy, SBI and Tata
The Indian stock markets lost ground during the week, with the key indices ending lower by around 2%. The BSE IT index gained 3.2% outperforming the broader market, led by strong results from Infosys. Merchant power rates have risen to their highest levels since August 2009 due to increased summer demand. Simplex Infrastructure has underperformed peers year-to-date but is believed to have entered an attractive valuation range.
The key Indian stock indices slumped by around 0.7% as European and US stocks declined. Metal, banking and IT stocks fell the most. Intraday volatility was high as traders rolled over positions. The markets may see further gains if the indices remain above certain support levels, but may correct otherwise. Piramal Healthcare acquired assets from BioSyntech, a medical device company, while Rabobank sold an 11% stake in YES Bank for Rs. 1,000 crore.
The Indian stock market ended the week higher, with the BSE Sensex and NSE Nifty gaining 3.0% and 2.8% respectively, backed by positive global cues and higher advance tax payments. The BSE IT index surged the most by 4.6%, outperforming the broader market, led by gains in Infosys, Wipro, HCL Tech, TCS and Tech Mahindra. Fitch Ratings raised India's local currency rating outlook to stable from negative. SpiceJet announced that Sun TV promoter Kalanithi Maran will buy a 37.75% stake in the company. The Broadband Wireless Access spectrum auction raised Rs. 38,543 crore for
IL&FS Transportation Networks (ITNL) is a pure play surface transportation company that is well positioned to capitalize on emerging opportunities in the road sector in India. The analyst values ITNL using a sum-of-the-parts approach and arrives at a target price of Rs. 358, implying 13.4% upside from current levels.
Coal India, the world's largest coal producer, is offering shares for sale. At the lower and upper price bands, the stock will trade at attractive valuations. The analyst recommends subscribing to the issue with a discounted cash flow-based fair value estimate of Rs. 294.
Infosys reported strong quarterly results but the stock is trading at fair
The key points from the document are:
1) Indian stock markets opened lower but recovered most losses to end the day with modest gains, as buying was seen in metal and banking stocks.
2) Gateway Distriparks won a tender for a 2.58 hectare plot that will help expand its container handling capacity.
3) The document provides analysis and commentary on company news, market trends, and securities recommendations.
- The Indian stock market declined on June 30, 2010 as the Sensex and Nifty closed down 1.4% and 1.5% respectively, taking cues from weak Asian markets and concerns about slowing Chinese economic growth.
- Four public sector banks, including SBI, announced their new base lending rates which analysts believe may increase corporate borrowing costs but market competition will ultimately determine effective rates.
- Drug maker Alembic announced plans to separate its pharmaceutical business into a new subsidiary through a demerger of the pharma business.
- The Indian stock market declined on June 30, 2010 as the Sensex and Nifty closed down 1.4% and 1.5% respectively, taking cues from weak Asian markets and concerns about slowing Chinese economic growth.
- Four public sector banks, including SBI, announced their new base lending rates which analysts believe may increase corporate borrowing costs but market competition will ultimately determine effective rates.
- Drug maker Alembic announced plans to separate its pharmaceutical business into a new subsidiary through a demerger of the pharma business.
The RBI increased key rates by 25 basis points each, which was in line with expectations. Indian stock markets gained slightly for the week despite sessions of high volatility. The BSE Bankex index outperformed others, rising 4.9% led by gains in SBI and Axis Bank. Axis Bank reported strong profit growth ahead of estimates driven by lower loan loss provisions.
- The Indian stock market indices declined on June 2, 2010, with the Sensex and Nifty closing down 2.2% and 2.3% respectively, due to weak global cues from a slowdown in Chinese manufacturing growth.
- The report provides analysis of movements in various industry indices and stocks, with some gaining up to 14% while others fell up to 6%.
- United Phosphorus is initiated with a Buy rating based on opportunities for growth in the global $40 billion agricultural chemicals industry as patents expire on large products and the company's attractive valuation compared to 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.
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.
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
1. Weekly Review
May 22, 2010
Global concerns dampen the mood on the bourses FII activity
(Rs crore)
The Indian stock markets lost quite a bit during the current week of trade, Cash Futures Net
As on (Equity) Activity
amidst sessions marked by high volatility, with both the benchmark indices,
May 14 (205) (1,854) (2,058)
the BSE Sensex and the NSE Nifty, ending lower by 3.2% each. The BSE
May 17 (1,032) (1,457) (2,489)
Mid- and Small-cap indices were also battered, with both the indices ending
May 18 (439) 837 398
in the red, losing 3.7% and 4.5%, respectively. During the week, among the May 19 (1,474) (1,533) (3,006)
major policy moves, the government more than doubled the price of natural May 20 (711) 107 (604)
gas produced from nomination blocks. On the sectoral front, most of the Net (3,860) (3,899) (7,759)
major sectoral indices ended deep in the red, with the BSE Realty index
losing the maximum of 8.8%, followed by the Metal index, down 6.5%.
Mutual Fund activity (Equity)
BSE Metal Index - Stumbles on global cues (Rs crore)
As on Purchases Sales Net Activity
The BSE Metal Index lost 6.5% over the previous week, underperforming the
May 13 592 798 (206)
Sensex by 3.3%, on the back of longer term worries about the outlook for
May 14 688 732 (44)
the Euro zone and China. Moreover, there were media reports that the
May 17 798 703 95
Indian government is also proposing a windfall tax on non-fuel minerals.
May 18 633 1,046 (413)
SAIL and Jindal Steel outperformed the BSE Metal Index by 4.0% each, but
Net 2,712 3,279 (567)
JSW Steel and Tata Steel underperformed the benchmark metal index by
Note: Mutual Fund data for 19th May not updated in SEBI
2.8% and 0.6%, respectively. On the iron ore front, NMDC outperformed
the Metal Index by 0.5%, on reports that the company is seeking a 90% hike
Global Indices
in its export contract prices, but Sesa Goa underperformed by 2.6% due to
a fall in the prices of iron ore fines. Among the Non-Ferrous pack, Nalco Indices May May Weekly YTD
14, 10 21, 10 (% chg)
outperformed the Metal index by 5.7%, while Hindustan Zinc, Sterlite and
Hindalco underperformed by 3.7%, 2.0% and 0.7%, respectively, as base BSE 30 16,995 16,446 (3.2) (5.8)
metal prices on LME declined during the week. Our top picks in the sector NSE 5094 4931 (3.2) (5.2)
are JSW Steel, Hindalco, Hindustan Zinc and Sterlite. Nasdaq 2,347 2,229 (5.0) (1.8)
DOW 10,620 10,193 (4.0) (2.2)
Inside This Weekly
Nikkei 10,463 9,785 (6.5) (7.2)
3G Auction Outcome - Event Update: The 3G Spectrum auction concluded HangSeng 20,145 19,546 (3.0) (10.6)
on Day 34, raising about Rs680bn for the Government, 2x of the budgeted Straits Times 2,855 2,701 (5.4) (6.8)
estimate. Bharti won 13 circles (outlay of Rs12,295cr), RCOM won 13 (outlay Shanghai Composite 2,697 2,584 (4.2) (21.2)
of Rs8,585cr), and Idea won 12 (outlay of Rs5,972cr). The aggressive bidding
KLSE Composite 1,339 1,286 (4.0) 1.0
would lead to increased capex spends, straining the leverage position of the
Jakarta Composite 2,858 2,623 (8.2) 3.5
companies. However, we believe that Bharti, Idea and RCOM managed to
KOSPI Composite 1,696 1,600 (5.6) (4.9)
corner crucial and scarce spectrum in their required respective circles, which
would cover up for their large existing subscriber base.
APM Gas Price De-regulation - Event Update: The Government has hiked
Price De-regulation Sectoral Watch
APM gas price from Rs3.20/scm to Rs6.82/scm. In a related development, Indices May May Weekly YTD
the cabinet has also approved the marketing margins of 14, 10 21, 10 (% chg)
US $0.112/mmbtu (Rs200/scm) for GAIL on APM gas marketing volumes.The BANKEX 10,846 10,394 (4.2) 3.6
move is positive for State upstream companies and GAIL. BSE AUTO 7,792 7,399 (5.1) (0.5)
BSE IT 5,246 5,047 (3.8) (2.7)
ICICI Bank - Event Update: The Board of Directors of ICICI Bank has granted
its in-principle approval for the amalgamation of Bank of Rajasthan (BoR) BSE PSU 8,934 8,842 (1.0) (7.2)
with ICICI Bank, subject to further approvals. Based on the swap ratio, ICICI
Bank has valued BoR at 5.3x FY2010E ABV, which is expensive in our view.
That said, at about 3.2% of ICICI Bank's MCap and 4.5% of Total Assets, the
acquisition is too small to have any material impact on ICICI Bank.
Note: Stock Prices are as on Report release date; Refer all Detailed Reports on Angel website
Please refer to important disclosures at the end of this report
2. Fundamental Focus | May 22, 2010
Focus
3G Auction Outcome
Event Update
Winner's Curse The company, however, missed out in the metro circles, as
the bidding crossed over 9-10x of the reserved price. The
The 3G Spectrum auction concluded on Day 34, raising about
average tele-density in the successfully subscribed circles stood
Rs680bn for the Government, 2x of the budgeted estimate.
at 51%, and offers enough room for growth in terms of an
Among the major bidders, Bharti won 13 circles (outlay of
untapped subscriber base.
Rs12,295cr), RCOM won 13 (outlay of Rs8,585cr), Idea won
12 (outlay of Rs5,972cr), Tata Tele won 9 (outlay of Rs5,864cr), Incidentally, Bharti and Idea had just three overlaps in terms
Vodafone won 9 (outlay of Rs11,618cr) and Aircel won 12 of successful circle wins, which make a potential case for future
(Outlay of Rs6,296cr). spectrum-sharing arrangements.
Bharti - Key Highlights Event Implications
Bharti has been declared the winner in 13 circles, including In a nutshell, we believe that the outcome is positive for RCOM
the key metro circles of Mumbai and Delhi. The total outlay and Idea, and neutral for Bharti. We believe that the aggressive
has been about Rs12.3bn, which has been the highest, though bidding would lead to increased capex spends, straining the
lower than the anticipated pan-India license valued at Rs16bn. leverage position of the companies in coming period. However,
we believe that Bharti, Idea and RCOM managed to corner
The company cornered key Metro circles, but missed on
crucial and scarce spectrum in their required respective circles.
few crucial circles such as Maharashtra and Gujarat.
Telecom operators will have to pay the spectrum payout in the
The winning circle covers about 65% of its total subscribers,
next 10 days; thus, we would see an increased interest burden
and a revenue market share of 69%
from 2QFY2010 onwards. Also, BWA auctions start on May
The 3G auction would lead to higher-than-estimated Capex;
21,2010, and with most of the telecom service providers
thus, this would increase the interest costs and may dilute the
participating in the auction (2 slots available and 11 bidders),
EPS by another 3%. However, we continue to remain positive,
the competition is likely to be fierce.
in view of its better financial placing, with a Debt-Equity of 0.1x
and net debt to EBIDTA of 0.3x. 3G Auction - Provisional Results
Players Circles won Payable
Amount Payable
RCOM - Key Highlights (Rs cr)
RCOM cornered 13 circle, with a strategic mix of Metros Bharti Airtel Delhi,Mumbai,Andhra Pradesh, 12,295.5
and C-Circles and an estimated outlay of Rs8.5bn. The company Karnataka,Tamil Nadu,UP(W),Rajasthan,
cornered many circles, despite its spare capacity, focusing on West Bengal,HP Bihar, Assam,North East,J&K
,
future opportunities. RCOM Delhi,Mumbai, Kolkata,Punjab,Rajasthan, MP, 8,585.0
The average tele-density in the successfully subscribed circles West Bengal,HP Bihar,Orissa,Assam,North East,J&K
,
stood at 61%. Estimated subscribers in GSM are about 40% of Idea Maharashtra, Gujarat, Andhra Pradesh, Kerala, 5,972.1
the total base of 102mn. On an aggregate subscriber base Punjab, Haryana, UP(E), UP(W), MP HP Bihar, J&K
, ,
(CDMA + GSM), the total revenue coverage in the winning Vodafone Delhi, Mumbai, Maharashtra, Gujarat, Tamil 11,617.9
territory stood at 41.1%. Nadu, Kolkata, Haryana, UP(E), West Bengal
Aircel Andhra Pradesh, Karnataka, Tamil Nadu, Kolkatta, 6,296.0
The incremental spend on 3G would further strain the
Kerala, Punjab,UP(E),West Bengal, Orissa, Assam,
company's balance sheet and would result in a further dilution
North East, J&K
in its profitability.
Tata Maharashtra, Gujarat, Karanataka, Kerala, Punjab, 5,864.3
Idea Cellular - Key Highlights Haryana, UP(W), Rajasthan, MP
Idea bagged 11 circles out of 22, with a strategy to support S-Tel HP Bihar, Orissa
, 337.7
the spectrum requirement in its strong territories. The total Total 50,968.4
revenue share coverage has been the highest at 81.5%. Source: DoT, Angel Research
Research Analyst - Rahul Jain/Vibha Salvi
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3. Fundamental Focus | May 22, 2010
Focus
APM Gas Price De-regulation
Event Update
Not a Pipe Dream Anymore overdue, this decision points towards the government's intent
to address the problems of subsidy- sharing and
The Government of India has approved a hike in the APM gas
under-recoveries. As the government is likely to consider the
price sold by ONGC and OIL from nomination blocks from
Kirit Parekh committee recommendations in the near-term, we
Rs3.20/scm to Rs6.82/scm. Prices are now at US $4.2/mmbtu
can also expect some of the recommendations to be accepted,
(pre-royalty adjusted) from US $1.9/mmbtu earlier. After the
which is likely to be positive for OMCs. Also, the improved
hike, APM prices are now in line with EGoM-determined gas
profitability of the upstream companies (ONGC, OIL and GAIL)
prices for the KG-D6. APM gas prices were last revised in 2005.
could prompt the government to change the subsidy-sharing
The move follows the Finance Ministry's suggestion of bringing
mechanism in favour of OMCs.
about pricing parity between APM and KG gas in one swift
move, rather than a phased increase in the APM gas prices as Impact Analysis
was proposed by the petroleum ministry. The prices will be
We expect ONGC to gain around Rs6,086cr on the Top-line
effective until March, 2014 (FY2014).
front and Rs4,047cr on the bottom-line front during FY2012E,
In a related development, the cabinet has also approved the thus translating into an EPS gain of Rs18.9/share. However, as
marketing margins of US $0.112/mmbtu (Rs200/scm) for GAIL we were building around a 15% increase in APM gas prices
on APM gas marketing volumes. Previous to this, GAIL did not over FY2010-12E, our Top-line and bottom-line for the company
receive any marketing margin on sales of APM gas. stands increased by Rs5,039cr and Rs3,351cr for FY2012E.
Thus, we expect an EPS accretion of Rs15.7/share on account
Impact on the Gas segment: We believe that the move is a step
of the gas price increase to Rs6.8/scm.
toward a uniform gas-pricing policy in the country, which is
likely to improve the competitiveness of imported LNG. This We expect OIL India to gain around Rs941cr on the Top-line
move could also encourage state-owned gas producers to front and Rs622cr on the bottom-line front during FY2012E,
develop marginal gas fields, which could increase domestic thus translating into an EPS gain of Rs25.9/share. Given the
gas production, and benefit the gas transportation companies fact that OIL India's net gas realisations were lower than that of
such as GAIL and GSPL, apart from the producers of the gas. ONGC's APM realisation, it stands to benefit more on account
of the increase in the gas prices to US $4.2/mmbtu.
On the negative side, City Gas Distribution Companies, IGL
and MGL, would be adversely impacted on account of the gas GAIL uses gas for its petrochemical and LPG operations;
price hike, as a large part of their supplies are at APM gas however, as it was not procuring APM gas, the company is not
prices. We believe that given the huge gross margins reported likely to be impacted by the gas price hike. Yet, we believe that
by these companies on account of the benefit of cheaper APM the levy of marketing margins on the APM gas increased GAIL's
gas in the past, it would be difficult for these companies to Top-line and profitability. According to our calculations, GAIL
maintain their margins. Moreover, given the fact that price of benefits by around Rs344cr on the Top-line front and Rs239cr
natural gas is indexed to administered retails selling price of on the bottom-line front, which translates into an EPS increase
LPG (14.2kg cylinder), price hike in the Domestic PNG segment of Rs1.9/share (FY2012E), on account of the levy of marketing
will be difficult. Currently, we await more clarity over the increase margins on the APM gas supplies.
in the prices of CNG for IGL before reviewing the stock. In case
Outlook and Valuation
of Gujarat Gas, given the fact that APM gas supplies form less
than 5.0% of its total gas sources, we do not expect the same to On account of earnings revision, we have upgraded ONGC
have any material impact on the company's financials. Target
from Neutral to Accumulate, with a Target price of
GAIL,
Rs1,233. In the case of GAIL, we have upgraded the target
Impact on the Oil marketing Segment: There is no direct
We
price by Rs27 to Rs580, and maintain a Buy on the stock. We
implication of the gas price hike on oil marketing companies.
do not have a rating on OIL India.
However, given the fact that the APM gas price hike was long
Research Analyst - Deepak Pareek/Amit Vora
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4. Fundamental Focus | May 22, 2010
Focus
ICICI Bank - Buy Price - Rs889
Target Price - Rs1,169
Event Update
Merger with Bank of Rajasthan branch would have to be atleast Rs2.5-3.5cr, while BOR's existing
Networth per branch is Rs1.3cr. If we add this additional capital
The Board of Directors of ICICI Bank has granted its in-principle
requirement to the acquisition price, then per branch acquisition
approval for the amalgamation of Bank of Rajasthan (BoR)
price would be about Rs8.8cr (assuming NW / branch of
with ICICI Bank, subject to further approvals. The swap ratio
Rs3.5cr). At this level, BOR's implied P/BV would work out to
has been fixed at 25:118 (25 shares of ICICI Bank for 118
about 2.5x, not taking into account the 2-3 years it may take to
shares of BoR).
scale up the productivity of these branches. Even on this basis,
As on March 31, 2009, Bank of Rajasthan had 463 branches the acquisition looks expensive relative to peers.
and 111 ATMs, total assets of Rs17,224cr, deposits of
That said, at about 3.2% of ICICI Bank's market cap and 4.5%
Rs15,187cr and advances of Rs7,781cr. It reported net profit
of Total Assets, in our view, the acquisition is too small to have
of Rs118cr in FY2009 and net loss of Rs10cr in the 9MFY2010.
any material impact on ICICI Bank. At Rs889, ICICI Bank is
In our view, the main benefit of the merger for ICICI Bank is
trading at 1.5x its FY2012E ABV (excl. subsidiaries) (without
BOR's branch network, concentrated in northern states like
factoring the acquisition into our estimates). We maintain a
Rajasthan (60% ot total branch network), Punjab, Haryana and
Target Price
Buy on the stock, with a Target Price of Rs1,169, representing
Delhi. Bank of Rajasthan was the only potential acquisition target
an upside of 31%.
amongst the old private sector banks to have such a presence,
while all its other peers have largely branch networks
concentrated in the south.
Outlook and Valuation
Based on the swap ratio, ICICI Bank has valued BoR at 5.3x
FY2010E ABV (at an 89% premium to yesterday's closing price),
which is expensive in our view, considering the poor profitability
and the recent asset-quality pressures and corporate governance
issues with the Bank of Rajasthan. Further, in such an acquisition,
there is downside risk from further NPAs from the target bank's
existing loan book.
Looking at it from a market cap per branch basis also, the
acquisition looks expensive, though less than it does in P/BV Valuations of Old private Banks
terms. As per our calculations, old private banks are trading at
Bank Market Cap. Branches MCap/Branch
an average MCap/branch of Rs5.4cr at current prices. Based
(Rs cr) (No.) (Rs cr)
on the swap ratio announced, the MCap/Branch paid for BoR
Bank of Rajasth. 3,039 463 6.6
works out to Rs6.6cr, which indicates a premium of 21% to the
City Union Bank* 1,326 202 6.6
peer average. If we compare the HDFC Bank and CBoP deal in
Dhanalaksh.Bank 944 265 3.6
FY2008, HDFC Bank had paid a consideration of Rs24.1cr per
Federal Bank 5,256 672 7.8
branch for CBoP .
Karnataka Bank 2,033 458 4.4
Keeping aside the risk of further book value erosion from fresh Karur Vysya Bank* 2,770 320 8.7
NPA accretion post-acquisition, even the existing capital Lak. Vilas Bank 775 270 2.8
adequacy of BOR is on the lower side. Moreover, in our view, South Ind.Bank 1,645 580 2.8
on a higher level of business per branch (from Rs37cr assets / Average 5.4
branch at present to about 50cr), the normalised Networth per Source: Company, Angel Research; Note: *As on March 31, 2009
Research Analyst - Vaibhav Agrawal/Amit Rane
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5. Fundamental Focus | May 22, 2010
Focus
Crompton Greaves - Buy Price - Rs243
Target Price - Rs307
4QFY2010 Result Update
Target Price - Rs356
Performance Highlights (Rs63cr). For FY2010, the net profit grew by 52.1% yoy to
Rs248cr (Rs163cr).
Crompton Greaves reported another strong quarterly
performance, with an impressive 39.9% yoy growth in its Outlook and Valuation
adjusted bottom-line to Rs271cr, which was better than our
Crompton Greaves is one of the leading players in the power
estimates. Although the company had a muted top-line
transmission and distribution space in the country. The company
performance, clocking a mere 1.9% yoy growth, it made up for
has a diversified business presence, with revenues accruing from
this with a wider-than-expected expansion in operating margins.
multiple streams that are spread across geographies. Besides,
PA
Strong operating performance - consolidated PAT surges by over the past few years, the company has made several strategic
~40%, beats expectations: On the consolidated level, Crompton overseas acquisitions, which, in addition to plugging in
Greaves posted a muted top-line growth of 1.9% yoy to technology gaps, have provided the necessary scale to its
Rs2,508cr (Rs2,460cr) for 4QFY2010. Although the standalone operations.
business posted a healthy top-line growth of 18.8% yoy,
During FY2010-12E, we expect the company to register a
international operations negated the effect, with a 19.0% yoy
Top-line and Bottom-line CAGR of 11.5% and 7.1%, respectively.
de-growth in its revenues (of which ~9% due to currency
At Rs243, the stock is quoting at 17.7x and 15.8x FY2011E
movement). For FY2010, the consolidated top-line grew by 4.6%
and FY2012E EPS, respectively, which we believe is attractive
yoy to Rs9,141cr (Rs8,737cr).
as compared to its peers, ABB and Areva T&D.
The consolidated EBITDA margin, however, expanded by 269bp Target Price
We maintain our Buy recommendation, with a Target Price
to 16.1% (13.4%), driven by higher operating margins for both of Rs307.
the standalone and international operations. Though the raw
material cost increased 204bp as a % of net sales, it was more
than made up for by the combination of lower other expenses
and employee costs. Notably, as the margin improvement
during the year was majorly led by operational efficiencies, the
management seemed confident of maintaining its margins at Key Financials (Consolidated)
a consolidated level for FY2011E. Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
Higher operating margins, coupled with a lower tax rate (due Net Sales 8,737 9,141 10,068 11,354
to the lower tax burden on international operations), led to an % chg 27.9 4.6 10.1 12.8
impressive 39.9% yoy growth in the adjusted net profit to Profit
Adj. Net Profit 560 860 882 986
Rs271cr (Rs194cr). For the full year FY2010, the consolidated
% chg 37.7 53.6 2.5 11.8
adjusted net profit grew 47.3% yoy to Rs825cr (Rs560cr).
EBITDA (%) 11.4 14.0 13.7 13.3
International business - sales under pressure, but margins
EPS (Rs) 8.7 13.4 13.7 15.4
improve by 463bp: The international business continues to face
P/E (x) 27.8 18.1 17.7 15.8
pressure, with the top-line falling sharply by 19.0% yoy to
Rs890cr (Rs1,098cr) for 4QFY2010, which was primarily driven P/BV (x) 8.6 6.3 4.9 3.9
by the 18.5% yoy de-growth in the revenues of the international RoE (%) 36.1 39.9 30.9 27.3
power systems segment. Nonetheless, the EBITDA margin for RoCE (%) 27.5 31.5 29.0 27.1
the international business witnessed an expansion of 463bp to
EV/Sales (x) 1.8 1.7 1.5 1.3
14.8% (10.2%), due to lower raw material costs along with
lower other expenses. Higher margins, coupled with a lower EV/EBITDA (x) 15.7 12.0 10.8 9.5
tax rate, resulted in a net profit growth of 27.8% yoy to Rs81cr Source: Company, Angel Research, Price as on May 18, 2010
Research Analyst - Puneet Bambha
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6. Fundamental Focus | May 22, 2010
Focus
Deccan Chronicle Holdings - Buy Price - Rs142
Target Price - Rs193
4QFY2010 Result Update
Target Price - Rs356
Performance Highlights Rs43 as the per share value for DCHL's IPL team. However, on
account of the uncertainty arising from the recent team auctions,
Political turmoil in AP affects sales; Top-line below our estimates:
Top
op-line
as covered in certain media reports, we have adopted a cautious
Deccan Chronicle Holdings Ltd (DCHL) reported a muted
approach, giving a 25% discount to our earlier per share price.
Top-line growth of 6.3% yoy to Rs191.7cr (Rs180.3cr),affected
Thus, we have arrived at a value of Rs32 per share for DCHL's
by the political turmoil in Andhra Pradesh (Telangana region).
IPL team.
The company reported a ~6% yoy growth in advertisement
revenue to Rs177cr (Rs166cr) and a flattish growth in circulation We value DCHL on an SOTP Basis and maintain a Buy
SOTP Buy.
revenue to Rs15cr (Rs14cr). However, Target Price
However, we have revised our Target Price downward to Rs193
(Rs216 earlier), based on: 1) Rs161 per share value for its
Gross Margin expansion continues; Earnings decline due to
Print
core Print Business (12x FY2012E Standalone Earnings), and
Tax
higher Tax rate: On the Operating front, DCHL registered a
Team
2) Rs32 per share value for its IPL Team (25% discount to the
significant Margin expansion of 1,900bp yoy, driving a 92.6%
earlier,
per share value calculated earlier, based on the US $225mn
yoy growth in EBITDA to Rs81.3cr (Rs42.2cr). The company
floor price set for the auction of new teams).
continued to benefit from benign newsprint prices and rupee
appreciation, with the raw material cost this quarter showing a Moreover, there exist upside risks to our valuation, on account
decline of 2,752bp yoy to Rs74.7cr (Rs119.9cr). However, the of the following:
staff costs and other expenditure for the company increased by
Higher Gate/Sponsorship Revenues: Addition of two new
247bp yoy and 605bp yoy (low base effect) to Rs18.1cr and
franchises would lead to an increase in the number of matches,
Rs17.6cr, respectively, limiting any further Margin expansion.
from 59 to 94 matches.
DCHL's reported weak Earnings for the quarter (on a standalone
Revision in Media Telecast Rights: After the auction, we expect
basis), which registered a decline of 20.2% yoy to Rs6.5cr
the IPL to re-work media telecast rights with Sony (to factor in
(Rs8.1cr), on account of the weak Top-line growth, a 1,883bp
the higher number of matches).
yoy jump in the Tax rate to 89.9% (71.1%), and a 32.9% yoy
increase in depreciation to Rs12.6cr (Rs9.5cr).
Key Financials (Standalone)
Outlook and Valuation
Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
After the 4QFY2010 results, we have revised our Top-line
Net Sales 815 892 991 1,113
estimates downward by 4-7% for FY2011E and FY2012E to
% chg 4.2 9.5 11.0 12.4
model in: 1) flattish circulation revenue, and 2) slow growth in
advertisement revenue (due to rising competition in the Chennai Profit
Net Profit (Adj) 140.1 261.1 286.1 325.4
market from TOI). % chg (48.5) 86.4 9.6 13.7
During FY2010-12E, we expect DCHL to post a CAGR of 11.7% OPM (%) 32.9 50.7 48.5 47.7
in its standalone revenues, driven largely by a 12.1% CAGR in EPS (Rs) 5.7 10.8 11.8 13.4
advertising revenues and a 6% CAGR in circulation revenues, P/E (x) 24.8 13.1 12.0 10.6
on account of a higher contribution from the Bangalore edition.
P/BV (x) 3.0 2.6 2.3 2.0
In terms of Earnings, we have factored an 11.6% CAGR during
RoE (%) 12.2 19.7 18.9 19.1
the period, driven largely by Top-line growth, as we expect
Margins to dip marginally as newsprint prices harden (we have RoCE (%) 14.9 23.7 23.5 24.2
modeled in ~10% rise in the newsprint). EV/Sales (x) 4.1 3.6 3.1 2.6
Based on the floor price of US $225mn for the recent, new EV/EBITDA (x) 12.5 7.1 6.4 5.5
team auctions (Kochi team and Pune team), we had calculated Source: Company, Angel Research, Price as on May 14, 2010
Research Analyst - Anand Shah/Chitrangda Kapur
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7. Fundamental Focus | May 22, 2010
Focus
Graphite India - Buy Price - Rs99
Target Price - Rs117
Target Price - Rs356
4QFY2010 Result Update
Performance Highlights Management expects the graphite electrode contracts to
remain quarterly, till there is volatility in prices. Once there is
Graphite India's (GIL) 4QFY2010 Sales growth of 66% yoy, on
stability in prices and buyers expect secular firming of prices,
a Standalone basis, came in line with our estimates. However,
the contracts are expected to return to annual basis.
FY2010 Sales (Consolidated) fell slightly more than our
expectation due to the lower-than-expected production at the Currently, expansion at the Durgapur facility is progressing
company's Nuremberg facility. Nevertheless, going forward, we slowly. However, it is expected to pick up from 1Q or 2Q of
believe that the company is well placed on account of FY2011E to get completed within the targeted time frame.
strengthening demand for graphite electrodes from the Steel
Outlook and Valuation
industry and large capacity expansion in the Durgapur plant.
We maintain our Earnings estimates for FY2011E and FY2012E. Going ahead, we expect the demand for graphite electrodes to
be strong as steel manufacturing through the EAF route picks
Muted Sales, Strong Margins: FY2010 Sales (Consolidated) up and the effect of de-stocking of inventories reverses. The
fell 10.1%, much lower than our estimates, mainly because of company's move to increase capacity at the Durgapur facility
the 50% drop in production at its German facility. Production at by 22,000MT/year as against the earlier plan to increase it by
the Indian plants fell 24% yoy. However, OPM for FY2010 10,500MT/year would provide a major boost to the company's
increased to a strong 29.4% (24.4%) owing to higher future growth prospects. Margins are expected to stay strong at
realizations. Interest cost for the year fell to Rs14.5cr (Rs35.1cr) over 24% levels during the next few years. Overall, we expect
mainly due to lower working capital requirements. GIL to register a CAGR of 19.1% in Top-line and 8.2% in Profit
Consequently, PAT for the year came in line with our estimate over FY2010-12E. At Rs99, the stock is trading at 1.2x and
at Rs235cr. 1.1x FY2011E and FY2012E P/BV, respectively. We maintain a
Key Highlights Target Price
Buy on the stock, with a Target Price of Rs117.
For 4QFY2010, the company's Sales grew at an impressive
66.5% yoy and 21.4% qoq albeit on a low base due to the
slowdown in 4QFY2009. In 4QFY2010, OPM at 29.0% fell
Key Financials (Consolidated)
from the high of 36.8% in 3QFY2010. For FY2010, Standalone
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
OPM stood at the historical high of 33.5%. Globally graphite
electrode prices increased in CY2009 on higher needle coke Net Sales 1,498 1,347 1,600 1,910
prices, but other raw material and manufacturing costs fell % chg 12.6 (10.1) 18.8 19.3
during the year. Going ahead, OPMs are expected to further Profit
Net Profit 237 235 239 275
correct to more reasonable levels of around 24.0%. PAT Margin
% chg 66.4 (0.9) 1.6 15.1
for 4QFY2010 was 16.4% compared to 22.6% in 3QFY2010.
EBITDA Margin (%) 24.4 29.4 24.4 24.2
Key takeaways from Management discussion
FDEPS (Rs) 11.6 10.7 12.2 14.0
Global leaders like SGL and GrafTech have shown more P/E (x) 8.3 9.0 7.9 6.8
aggression to win orders in the last few months to ensure better
P/BV (x) 1.5 1.3 1.2 1.1
capacity utilisation. Consequently, graphite electrode prices have
declined by 8-10% over the last few months. RoE (%) 25.3 19.6 16.7 16.6
RoACE (%) 20.4 20.4 19.5 20.2
Management expects downside in pricing to be minimal,
3-4% at most, over the next couple of quarters. Post that, as EV/Sales (x) 1.1 1.2 1.3 1.0
demand for graphite electrodes increases, capacity utilisation EV/EBITDA (x) 4.6 4.1 5.3 4.2
of the global players will increase and prices would start firming Source: Company, Angel Research, Price as on May 14, 2010
up again.
Research Analyst - Jai Sharda
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8. Fundamental Focus | May 22, 2010
Focus
JK Lakshmi Cement - Buy Price - Rs65
Target Price - Rs86
4QFY2010 Result Update
Target Price - Rs356
Performance Highlights by FY2012E, which will be sufficient to meet close to 90% of its
power requirement on the expanded capacity of 8mtpa. The
JK Lakshmi Cement (JKLC) reported a healthy 21.1% yoy growth
company expects to sell 25MW (including the 21MW procured
in its net sales to Rs441cr during 4QFY2010, primarily on
from VS Lignite power) of surplus power from FY2011E onwards.
account of an impressive growth in the sales volume. The
company's sales volume during the quarter rose by 21% yoy to Outlook and Valuation
1.41mn tonnes, aided by a capacity increase and robust
The stock trades at a P/E of 4.1x, at an EV/EBITDA of 3.9x and
demand. However, on the operating front, the company's
at an EV/tonne of US $65/tonne, according to its FY2012E
margins declined by 756bp yoy, on account of a surge in raw
estimates. On the valuation front, we have valued JK Lakshmi
material costs (up 48.3% yoy) and other expenses (up 72.8%
Cements at an average of a Target EV/EBITDA of 4x and an
yoy). The company reported a 32.6% decline in its Bottom-line
EV/tonne of US $60/tonne, which is at a discount to the
to Rs70cr, on account of higher depreciation and interest costs.
replacement cost, to arrive at a fair value of Rs86. We maintain
Higher raw material and interest costs drag Net Profit down
Profit a Buy recommendation on the stock.
by 32.6% yoy: JKLC's operating profit declined by 8.7% yoy to
Rs102.3cr, despite a 21.1% growth in net sales to Rs441cr. The
operating profit was marred by an increase in raw material,
freight and other expenses, although the realisations remained
flat yoy. The company had also purchased high cost clinker
from external sources during the quarter. The interest and
depreciation costs rose substantially during the quarter on a
yoy basis, and stood at Rs10.7cr (net interest income of Rs2.1cr)
and Rs21.3cr (Rs14.1cr), respectively.
Operational Highlights
Key Financials
The company's per tonne cement realisation was flat yoy during
the quarter, although it was up by 3% qoq. The company's Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
average realisation during the quarter stood at Rs3,130/tonne. Net Sales 1,225 1,491 1,376 1,570
The company's key markets in Western and Northern India % chg 10.6 21.7 (7.7) 14.1
experienced robust demand during the quarter, which resulted Profit
Net Profit 179 241 154 192
in the prices remaining at healthy levels. The raw material costs
% chg (20.2) 35.0 (36.3) 25.1
per tonne were up by 22.5% yoy and stood at Rs659. Operating
profit per tonne stood at Rs726 during the quarter, down by OPM (%) 25.4 28.5 24.4 26.1
24.7% yoy and by 5.2% qoq. EPS (Rs) 14.6 19.7 12.5 15.7
Capacity addition on track P/E (x) 4.4 3.3 5.2 4.1
P/BV (x) 1.0 0.8 0.7 0.6
The company is in the process of expanding its cement and
power capacities. JKLC, which currently has a capacity of RoE (%) 24.2 25.7 13.9 15.4
5.4mtpa, is setting up a 2.7mtpa green-field cement plant in RoCE (%) 16.6 21.2 13.0 13.7
Chattisgarh, at a cost of Rs1,200cr. The Chattisgarh plant is EV/Sales (x) 1.0 0.8 1.0 1.0
expected to be operational by December 2012, and will take
EV/EBITDA (x) 3.7 2.9 4.1 3.9
the company's total cement capacity to 8mtpa. It is also planning
to increase its total captive power capacity from 36MW to 66MW EV/Tonnes (US $) 55 57 64 65
Source: Company, Angel Research, Price as on May 19, 2010
Research Analyst - Rupesh Sankhe/V Srinivasan
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9. Fundamental Focus | May 22, 2010
Focus
McNally Bharat Engineering - Buy Price - Rs312
Target Price - Rs486
Target Price - Rs356
4QFY2010 Result Update
Performance Highlights book.
McNally Bharat Engineering (MBE)'s 4QFY2010 Sales and Adj. McNally Sayaji plans to invest Rs65cr in setting up a new
PAT growth of 19% and 142%, respectively, was ahead of our facility for its product, while the Parent MBE plans to have a
estimates. MBE's strong performance was on the back of a higher capex of Rs45cr for FY2011E.
EBITDA margin and lower interest outflow. The major
A decision on the rights issue would be taken by June 2010.
improvement was on the EBITDA front, where margins expanded
by 165bp, from 5.6% (4QFY2009) to 7.3% (4QFY2010). Overall, the management has outlined a revenue target of
Interest costs for the quarter declined by 55% yoy. Overall, MBE's around Rs5,000cr by FY2013E, of which MBE standalone would
FY2010 performance was ahead of our expectations. stand at Rs4,000cr, MSE at Rs600-700cr and the CMT group
(international subsidiary) at Rs500cr.
Strong, execution-led growth: MBE's (standalone) sales for the
Strong,
quarter grew by 19%; however, its EBITDA grew by 54%, on the Outlook and Valuation
back of better execution and cost control. Overall interest costs We believe that an improving economic scenario (indicated by
for the quarter declined by 55% yoy, due to better working capital a revival in the IIP), the continuous government focus on
management and a reduction in the average cost of borrowing. infrastructure spend and a pick-up in private capex augurs well
The overall Adj. PAT for the quarter increased by 142% to Rs24cr for the companies providing EPC solutions for the core sectors
from Rs10cr (4QFY2009). For the full year FY2010, standalone of the economy. MBE's current consolidated order book stands
sales grew by 50% to Rs1,448cr (from Rs968cr in FY2009), at Rs5,110cr (2.6x FY2010 revenue). Going ahead, over
while the EBITDA margin improved by 80bp to 6.8% (from 6%). FY2010-12E, we estimate the company to register a CAGR of
Strong order inflow continues: MBE's Order inflow has been 28% and 35% in Sales and Profit, respectively. We maintain
on the rise, having increased from Rs700cr in FY2005 to Target
our Buy recommendation on the stock, with a revised Target
Rs3,334cr in FY2009, posting a CAGR of 48% over the Price of Rs486.
mentioned period. For FY2010, the company ended the year
with an order book of Rs4,550cr, while we estimate that on a
consolidated basis it stood at Rs5,150cr. The management has Key Financials (Consolidated)
further indicated that bids for order worth Rs1,300cr have been Y/E March (Rs cr) FY2009 FY2010E FY2011E FY2012E
placed and the outcome of the same is expected during the year. Net Sales 1,115 2,019 2,501 3,332
Key takeaways from the Conference call % chg 101.0 81.1 23.9 33.2
Profit
Adj Profit 39.7 65.0 93.6 118.7
The management expects the Power sector to be the key
growth driver for the company over the next few years. The key % chg 91.1 63.9 44.0 26.8
opportunity areas are in Material handling solutions (which Adj FDEPS (Rs) 12.8 20.9 27.4 34.7
include coal handling, coal washer, desalination plant and EBITDA Margin (%) 9.8 7.9 9.7 9.6
RO plant).
P/E (x) 24.5 14.9 11.4 9.0
After bagging 2 BoP-based orders (770 MW), MBE is P/BV (x) 4.7 3.6 2.7 2.1
qualified to bid for all ranges of BoP projects across the power
RoE (%) 21.7 27.2 28.0 26.1
sector. BoP projects have margins in the region of 7-8%;
RoACE (%) 29.4 27.0 31.0 30.3
however, the margin improves once a company starts executing
a higher range of projects. EV/Sales (x) 1.0 0.6 0.5 0.4
EV/EBITDA (x) 10.6 7.5 5.5 4.6
Going ahead, MBE plans to build up its skill set in Cement,
Source: Company, Angel Research, Price as on May 18, 2010
and the Oil and Gas industry, as it plans to diversify its order
Research Analyst - Sageraj Bariya
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