Indian stock market and companies daily report (February 21, 2012, Tuesday)

The domestic markets are expected to open flat or marginally in green following higher closing across most of the western markets. Asian stock markets are trading flat as investors remain cautions and wait for European finance ministers in Brussels to approve a crucial second bailout for Greece.

The US markets traded choppily on Friday (closed on Monday) as the economic data releases painted a mixed picture with a report from the Conference Board showing that its index of leading economic indicators increased for the fourth consecutive month in January, while another report from the Labor Department showing only a modest increase in consumer prices in the month of January. Although investors seemed reluctant to make any significant moves going into the long weekend, optimism that European finance ministers will approve a new bailout package for Greece helped to keep traders from doing much profit taking. Meanwhile Indian shares rebounded on Friday after some consolidation the day before, with firm global cues supporting the liquidity-driven rally.

Markets Today

The trend deciding level for the day is 18,315/5,572 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,397 – 18,504/5,599 – 5,634 levels. However, if NIFTY trades below 18,315/5,572 levels for the first half-an-hour of trade then it may correct up to 18,208 – 18,126/5,537 – 5,511 levels.

Cement companies raise prices

Cement companies have raised prices in the northern and western regions in the range of Rs.7 to Rs.10 per bag with effect from February 17, 2011. The price hike follows the correction in the region during January due to the severe winter season, which affected construction activities. We believe the recent price hike is an effort by cement manufacturers to pass on the hike in operating costs. We are currently Neutral on the cement sector, as we believe valuations are significantly ahead of the cycle, but we maintain our Buy recommendation on JK Lakshmi Cement due to its attractive valuations, with a target price of Rs.79.

NMDC cuts ore prices; lowers volume guidance

NMDC has cut prices of iron ore fines and lumps by 20% and 3%, respectively, for 4QFY2012 on the back of the decline in global iron prices, the recent rupee appreciation and increased export duty on iron ore. The price cut by NMDC is higher than our expectations given the shortage of iron ore in the domestic markets.

NMDC has also lowered its sales volume guidance for FY2012 and FY2013. The company now expects sales volumes of 27mn tonnes and 30mn tonnes (earlier 30 mn tonnes and 33mn tonnes) for FY2012 and FY2013, respectively. Although the company has ~5mn tonnes of iron ore inventory at its mine pit-heads, however it faces logistical constraints to increase off take due to breakdown in slurry pipeline, lower availability of railway rakes and stricter regulations in transportation of iron ore in Karnataka. Considering the company’s revised sales volumes guidance, we lower our 4QFY2012 and FY2013 realization and sales volume estimates.

Although NMDC has a strong balance sheet, presence in sellers market (iron ore), low cost of production, high-grade mines and long mine life, we now expect sales volumes to witness a CAGR of only 5.2% over FY2011-2013. On account of lower volume growth and lower realization, NMDC’s bottom line is expected to grow by only 4.0% yoy during FY2013. Further, given the 23% rise in the stock price since January 1, 2012, we recommend Neutral on the stock.

Result Review – 4QCY2011

CRISIL announced its 4QCY2011 numbers. Net sales increased by 26.6% yoy to Rs.225cr (Rs.177cr) led by strong growth in the research segment. Research segments revenue increased by 34.0% yoy while the rating segment and advisory segments revenue increased by 14.1% and 7.0% respectively. EBITDA increased by 15.2% yoy to Rs.80cr (Rs.69cr) due to higher revenue. EBITDA margin declined by 352bps yoy to 35.6% (39.1%). PAT increased by 10.4% yoy to Rs.56cr (Rs.51cr) while margin declined by 366bps yoy to 24.8% (28.5%) almost in line with EBITDA margin contraction. We will be coming out with a detailed report post management interaction. We continue to maintain an Neutral rating on the stock.

Economic and Political News
- Government may let foreign individuals directly buy corporate debt
- Railways stares at a Rs.2lakh cr crunch
- Bankers agree to subscribe to Air India’s Rs.7,400cr bond issue

Corporate News
- Ashok Leyland's Optare eyes small bus market
- Frozen bank accounts led to disruptions: Kingfisher
- Essar Oil plans to raise Rs.3,000cr in next 15 months

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Indian stock market and companies daily report (February 13, 2012, Monday)

The domestic markets are expected to edge higher following positive opening across most of the Asian markets. Domestic indices fell modestly on Friday, as data showing a slowdown in December IIP numbers prompted investors to book some profits after recent sharp gains.

Globally, cues remained mixed. European markets slid moderately on Friday as apprehensions remained over the second bailout package for Greece. Eurozone finance ministers had deferred the approval of a second bailout package for Greece (€130bn), demanding Greece’s acceptance over a new set of austerity measures. U.S. bourses also ended on a negative note, tracing concerns stemming from the Eurozone.

On the domestic front, consistent shrinkage in manufacturing output emphasizes the need to trim rates by RBI. However, domestic bourses seemed to have marked down macroeconomic concerns and have firmed up considerably. Nonetheless, one cannot rule out the pessimism surrounding the Eurozone, which can reverse market directions. Markets will closely trace the developments in the domestic as well global markets.

Markets Today

The trend deciding level for the day is 17,755 / 5,383 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,883 – 18,018 / 5,426 – 5,470 levels. However, if NIFTY trades below 17,755 / 5,383 levels for the first half-an-hour of trade then it may correct up to 17,621 – 17,492 / 5,339 – 5,297 levels.

Industrial production for December dips to 1.8%

Industrial production (IIP) growth slipped again, growing by weak 1.8% for December, after the strong rebound witnessed in November (growth of 5.9% compared to negative 4.7% growth for October). IIP index growth of 1.8% was the second slowest, after the contraction witnessed in October 2011, in more than two years. IIP growth was also below the median expectation of Bloomberg’s survey of economists (2.9%). The 12-month rolling industrial production growth, which has been on a declining trend since November 2010 (9.9%), slipped further to 4.7%.

The dip in IIP can mostly be attributed to slow growth in the manufacturing sector (growth of 1.8% compared to 6.6% in November 2011 and 8.7% in December 2010), which accounts for ~75% of the overall industrial production. In terms of industries, 15 of the 22 industry groups in the manufacturing sector registered positive growth during December. The slowdown in mining persisted with a contraction of 3.7% for December (5th consecutive month of contraction). Growth in electricity production continued to be healthy, growing by 9.1% in December.

As per use-based data, capital goods production data continued to be volatile, declining by steep 16.5%. Production of intermediate goods contracted by 2.8% in December, however growth in consumer goods and consumer durables remained strong, growing by 10.0% and 13.4%, respectively.

3QFY2012 - Result Reviews

DLF

DLF announced its 3QFY2012 numbers. The company’s net sales declined by 18.0% yoy and 19.7% qoq to Rs.2,034cr, coming in well below our estimate of Rs.2,719cr. EBITDA came in at Rs.823cr, down 30.2% yoy, on the back of lower revenue and OPM margin compression. OPM contracted by 706bp yoy to 40.4%, above our estimate of 43.7%. PAT declined by 44.6% yoy to Rs.258cr, which was well below our estimate of Rs.414cr, despite a sharp increase in other income, which increased by 217% yoy to Rs.362cr (Rs.114cr). The decline in PAT was largely due lower revenue, OPM contraction and higher interest cost during the quarter, which increased by 44.8% yoy to Rs.620cr in 3QFY2012. We continue to maintain our Neutral recommendation on the stock. We may revise our estimates and target price post management’s concall.

JSW Steel

JSW Steel reported higher-than-expected consolidated adjusted PAT during 3QFY2012. However, the company reported net loss of Rs.48cr in 3QFY2012 on account of exceptional losses. The company had reported better-than-expected standalone numbers for 3QFY2012 on January 20, 2012. Consolidated net sales grew by 40.9% yoy to Rs.8,405cr (slightly below our estimate of Rs.8,843cr). Net sales growth was driven by increases in steel volumes (+20.0% yoy to 1.9mn tonnes) and realization (+18.2% yoy to Rs.43,401/tonne). Consolidated EBITDA increased by 29.6% yoy to Rs.1,317cr. The company reported exceptional items related to forex loss of Rs.504cr and loss of Rs.55cr from JSW Ispat (associate company) during the quarter. Consequently, the company reported net loss of Rs.48cr in 3QFY2012, compared to net profit of Rs.292cr in 3QFY2011. However, adjusted net profit, excluding exceptional items, increased by 75.1% yoy to Rs.511cr (higher than our estimate of Rs.279cr). We remain Neutral on the stock.

CCCL

Consolidated Construction Consortium (CCCL) posted disappointing set of numbers for 3QFY2012, as expected. On the top line front the company posted 10.0% yoy decline to Rs.446.5cr, lower than our estimate of Rs.535.9cr. On the EBITDAM front, CCCL continued its dismal performance and registered a dip of 510bp yoy to 4.6%, which was higher than our estimate of 3.2%. Interest cost came in at Rs.18.3cr a yoy/qoq jump of 45.1%/6.4% respectively, and in line with our estimate of Rs.18.6cr. Owing to poor show at revenue and margin level, along with interest burden, the bottom line posted a loss of Rs.3.2cr in 3QFY2012 vs. profit of Rs.16.7cr in 3QFY2011 and against our estimate of loss of Rs.5.2cr. We maintain neutral view on the stock.

3QFY2012 - Result Previews

Coal India

Coal India is slated to report its 3QFY2012 results. We expect net sales to increase by 39.2% yoy to Rs.17,664cr, mainly on account of coal price increase taken during February 2011. However, EBITDA margin is expected to contract by 264bp yoy to 24.5% in 3QFY2012 on account of higher employee cost provision. Net profit is expected to increase by 39.0% yoy to Rs.3,650cr. We have a Neutral view on the stock.

State Bank of India

State Bank of India is scheduled to announce its 3QFY2012 results. We expect the bank to report healthy NII growth of 19.3% on a yoy basis (up 3.6% on a qoq basis). Non-interest income growth is expected to be moderate at 14.4% yoy. Operating income of the bank is expected to grow by healthy 18.0% yoy to Rs.14,584cr. Provisioning expenses are expected to increase substantially by 63.4% yoy, considering the cyclical headwinds to asset quality. Hence, net profit growth is expected to be moderate at 10.1% yoy to Rs.3,113cr. We currently have an Accumulate rating on the stock with a target price of Rs.2,364

Sun Pharmaceuticals

For 3QFY2012, Sun Pharma is likely to report 18.7% yoy growth on the sales front, mainly on the back of integration of Taro, which is expected to be the growth driver of export formulation sales. On the domestic front, Indian formulation sales are expected to report a muted performance. Despite strong top-line growth on account of the integration, operating profit margin is expected to expand by 690bp yoy, with margin likely to be around 34.4%. Net profit is expected to register growth of 21.4% yoy during the quarter. We recommend Neutral on the stock.

SAIL

SAIL is expected to announce its 3QFY2012 results. We expect the company’s top line to grow by 9.8% yoy to Rs.12,239cr, mainly on account of higher realization. However, EBITDA margin is expected to decline by 211bp yoy to 14.0% on account of higher input costs. The bottom line is expected to decline by 2.2% yoy to Rs.1,083cr. We maintain our Neutral rating on the stock.

Cipla

For 3QFY2012, Cipla is expected to post net sales growth of 10.7% yoy to Rs.1,662cr, driven by the domestic and exports performance. On the operating front, OPM (excluding technical know-how fees) is expected to come in at 21.8%, registering an expansion of 410bp yoy. Further, net profit is expected to increase by 26.8% yoy to Rs.295cr. We recommend Neutral on the stock.

Motherson Sumi Systems

Motherson Sumi Systems is scheduled to announce its 3QFY2012 results today. On a consolidated basis, we expect the company to report a healthy 13% yoy growth in revenues to Rs.2,343cr for the quarter. On the operating front, the company is expected to report a 282bp yoy contraction in margins to 8.6%. As a result, the net profit is expected to decline by 26% yoy to Rs.79cr. The stock rating is under review.

Areva T&D – 4QCY2011

For 4QCY2011, Areva T&D is expected to post subdued top-line growth of 4.2% yoy to Rs.1,383cr, mainly on account of lower volumes, pricing pressures and execution slowdown. Consequently, EBITDA margin is expected to compress by ~443bp yoy to 9.0%, although we expect a sequential improvement of ~100bp due to slight easing of pricing pressures. Led by muted growth and dip in margin, the company’s PAT is expected to decline by 35.5% yoy to Rs.56.8cr. At the CMP, the stock is trading at 25.9x and 21.9x CY2011E and CY2012E EPS, respectively. We remain Neutral on the stock.

CESC

CESC is expected to announce its 3QFY2012 results. The company is expected to register 25.6% yoy growth in its standalone top line to Rs.1,157cr, aided by higher sales volume and better realization. OPM is expected to be flat at 27.6%, while net profit is expected to increase by 33.9% yoy to Rs.147cr during 3QFY2012. We maintain our Buy rating on the stock with a target price of Rs.304.

Economic and Political News
- Exports up 10%, imports by 20% in January 2012: Commerce secretary
- Direct tax collection to miss Budget estimate
- Government may enhance tax deduction for housing loan in Budget

Corporate News
- Govt. notifies rules for competitive bidding for coal blocks
- Punjab’s industry strongly objects to 55% hike in power tariff
- Reliance Industries shuts distillation unit at Jamnagar facility for 3 weeks
- Tata Motors hikes prices by up to Rs 12,000; leaves Nano, Aria

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Indian stock market and companies daily report (January 09, 2011, Monday)

Indian markets are expected to open in red taking cues from gap down opening in most of the Asian markets and negative closing in most of the global markets on Friday. The Indian markets ended flat to modestly high on Friday, reversing early declines, as European stocks rose and expectations of an interest rate cut this month heightened.
Globally, most of the US and European markets closed lower on Friday traders shrugged off another upbeat U.S. employment report amid continued concerns about the ongoing European debt crisis, stocks turned in a lackluster performance during trading. Selling pressure in global markets was also generated by news that Fitch Ratings downgraded Hungary to junk status. Adding to the concerns, ECB said overnight deposits by European commercial banks reached a new record high of EUR455.3bn. The markets this week be closely watching out from IIP numbers and Infosys results which will be released on January 12, 2012. Infosys result is expected to set tone for the upcoming result season.

Markets Today
The trend deciding level for the day is 15,861 / 4,750 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 15,888 – 15,926 / 4,757– 4,766 levels. However, if NIFTY trades below 15,861 / 4,750 levels for the first half-an-hour of trade then it may correct up to 15,823 – 15,796 / 4,740 – 4,733 levels.

NTPC gets back three de-allocated coal blocks
The Coal Ministry has given back three coal blocks to NTPC Ltd. The ministry had taken back these blocks last year as the company had failed to develop them within the stipulated period. All the blocks have been given back on the condition that they would be developed within two years, failing which they would be again taken back by the Coal Ministry. At the CMP, the stock is trading at P/BV of 1.6x its FY2013 estimates. We maintain our Buy recommendation on the stock with a target price of `200.

Idea challenges fresh liquidated damages imposed for two circles
Idea Cellular has approached telecom tribunal TDSAT against the government’s move to impose additional liquidated damages on it for not meeting roll-out obligations in two circles – Haryana and Maharashtra. The contention of the telco is that when the main penalty for these two circles has already been set aside by the tribunal, there is no point in imposing the additional penalty. The main penalty had been set aside on December 5. The counsel appearing for Idea also said that DoT has imposed penalty on it without serving a show cause notice, thereby denying it an opportunity to present its case in a proper manner. TDSAT has directed the DoT to file reply on Idea's plea by Wednesday. It has also asked DoT not to take any action against the operator. We maintain our Neutral recommendation on the stock.

Economic and Political News
- 9% growth in 12th Plan a challenge, says Montek Singh
- Proposal for Japanese FDI in DMIC project gets MEA nod
- Fiscal deficit may be more than projected, says Pranab Mukherjee

Corporate News
- Ashok Leyland Stile and Partner unveiled
- After Kingfisher, AI Express, DGCA raps other carriers
- JSPL commissions new unit, capacity rises to 917 MW
- GMR Infra issues debentures worth `250cr to GMR Airports
- Mundra UMPP's first 800MW unit starts production

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Indian stock market and companies daily report (January 05, 2012, Thursday)

Indian markets are expected to open lower following negative cues from the European markets and the Asian markets. Asian stocks are trading in the red after Italy’s biggest bank said it needs to raise more capital, spurring concern that the European debt crisis is worsening.

Indian shares ended a choppy session modestly lower on Wednesday, with key benchmarks indices losing less than half a percent each, as investors took some profits after a two-day rally.

European shares snapped a four-day streak of gains on Wednesday as UniCredit SpA’s plan to sell shares fueled concern that banks need to raise capital to weather the debt crisis. US market traded lower in the first half due to profit taking, with some traders cashing in on Tuesday's strong gains amid lingering concerns about the European debt crisis and the outlook for the global economy. The downward momentum was partly offset by the release of a report from the Commerce Department showing a rebound in new orders for U.S. manufactured goods, leading to US markets ending marginally in the green.

Markets Today

The trend deciding level for the day is 15,903/4,754 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 15,984 - 16,086/4,779 - 4,808 levels. However, if NIFTY trades below 15,903/4,754 levels for the first half-an-hour of trade then it may correct up to 15,802 - 15,721/4,725 - 4,700 levels.

Cement Dispatches – December 2011

UltraTech reported cement dispatches for December 2011, which were up by strong 10.6% yoy to 3.62mn tonnes. However, for 3QFY2012, growth in dispatches has been modest at 5.9%. In December 2011, the company managed to post better growth in dispatches compared to Ambuja Cements' growth, which reported modest growth of 5.7% yoy. We continue to remain Neutral on UltraTech.

KEC International secures orders worth Rs.1,253cr

KEC International (KEC) has bagged orders totaling Rs.1,253cr across various business verticals. In the transmission and distribution space (T&D), the company secured orders worth Rs.976cr. Order intake in MENA region stood at Rs.414cr (Rs.310cr and Rs.104cr worth of orders from Saudi Arabia and Afghanistan, respectively). SAE Towers secured orders worth Rs.154cr. In addition, Rs.350cr worth of orders came from the U.S., Kenya and Philippines. Notably, only one order came from the domestic T&D space (Rs.59cr), thus demonstrating the company’s globally diversified strength. The completion time of all these orders ranges from 12-27 months. In addition to the above, the company bagged orders in the business verticals of water (Rs.123cr), cables (Rs.105cr) and telecom (Rs.49cr). The current order book of the company stands at Rs.9,000cr.

KEC’s globally diversified model has enabled it to gain an edge over its domestic peers in the T&D space. While domestic players have struggled to secure orders amid the slowdown, KEC has consistently maintained its average quarterly run rate of Rs.1,200 since the past several quarters. In addition, new businesses of water, railway and telecom are faring well (pace of new orders is gradually increasing). Hence, given the latent potential of the company and healthy return ratios (25%), the valuations of 4.3x FY2013E EPS (well below its historic PE multiple average of 14.0x) are compelling. We recommend Buy with a target price of Rs.45.

Economic and Political News
- Government defers decision on PSU disinvestment via buyback-
- Finance Ministry rules out floating rates in postal savings
- Global food prices expected to remain high: FAO

Corporate News
- ONGC finds four more potential reserves
- Bosch to invest Rs.3,000cr in India on expanding capacity
- Hero MotoCorp unveils three new products at Auto Expo, New Delhi
- TCS adds 200 clients on its SME platform iON
- Dhanlaxmi Bank raises NRE term deposit rates

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Indian stock market and companies daily report (January 04, 2012, Wednesday)

Indian markets are expected to open in the green following positive cues from the European markets and the Asian markets. Asian stocks trading in the green after U.S. manufacturing increased at the fastest pace in six months. Indian shares rallied on Tuesday as inflation worries seem to be abating and the Reserve Bank of India said it might ease monetary policy to address concerns about economic growth.
The US markets ended in the green as markets benefited from positive reactions to the latest batch of economic data. The early rally on Wall Street was partly due to the release of a report showing a modest rebound in Chinese manufacturing activity in the month of December. A separate report showing a notable drop in German unemployment also generated some buying interest. Stocks saw continued strength following the release of a report from the Institute for Supply Management showing that its index of activity in the U.S. manufacturing sector rose to a six-month high in December.

Markets Today
The trend deciding level for the day is 15,850/4,738 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,060 – 16,180/4,800– 4,835 levels. However, if NIFTY trades below 15,850/4,738 levels for the first half-an-hour of trade then it may correct up to 15,730 – 15,520/4,703 – 4,641 levels.

Cement Dispatches – December 2011
Ambuja Cements’ dispatches stood at 1.93mn tonnes for December 2011, up by modest 5.7% yoy on a high base of last year. For CY2011, the company’s dispatches grew marginally by 4.2% to 20.96mn tonnes. During CY2010, the company added 2mtpa of capacity, post which its overall capacity stands at 27mtpa. We continue to remain Neutral on Ambuja Cements.

Reliance Industries gets nod to develop new D6 fields
The government has approved Reliance Industries' US$1.5bn plan to develop the new D6 block, which has the potential to produce additional 10mmscmd gas. RIL and, its partner, BP have four months to start work on the project as the KG D6 block faces adverse weather during the rest of the year. Until further clarity on the anticipated production from the block, we maintain our estimates and maintain our Buy rating on the stock with a target price of Rs.1,006.

HCC bags order worth Rs.289cr
Hindustan Construction Company (HCC) has received a Letter of Acceptance (LOA) for a Rs.289cr contract to construct a bulk water transmission system for  Gujarat Water Infrastructure Limited, a Government of Gujarat Undertaking. The work involves construction of a 57km-long water transmission pipeline between Dhanki and Maliya villages under the Swarnim Gujarat Saurashtra-Kutch, Water Grid Programme. The project will be completed in 12 months. With this order, HCC’s outstanding order book now stands at ~Rs.16,967cr (4.1x FY2011 revenue). We maintain our Neutral view on the stock.

Economic and Political News
- DoT to demand Rs.1,593cr from companies for under-reporting revenue
- Government may okay Rs.300cr for marketing support to MSMEs
- Union Budget to be presented on March 16, 2012
- Companies Bill may be cleared in Budget session: Law Minister

Corporate News
- RIL to fund Network 18’s Eenandu stake buy
- IDFC to raise upto Rs.4,500cr via infra bonds
- Bajaj Auto unveils its first-ever four-wheeler, RE60, in New Delhi
- Suzlon Energy bags order to supply 57 wind turbines in the U.S.

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