Bank of Baroda, Mphasis, Bombay Rayon Fashions, Indotech Transformers
Thursday, January 31, 2008
Foreign institutional investors (FIIs) sold shares worth net Rs 611.40 crore on Wednesday, 30 January 2008, compared to their selling of Rs 285.10 crore on Tuesday, 29 January 2008.
FII outflow of Rs 611.40 crore on 30 January 2008 was a result of gross purchases of Rs 2913.20 crore and gross sales Rs 3524.60 crore. The 30-share BSE Sensex lost 344.98 points or 1.91% at 17746.96 on that day.
FII outflow in January 2008 totaled Rs 13,035.70 crore (till 30 January 2008).
There are a total of 1,279 FIIs registered with the Securities & Exchange Board of India (Sebi).
Nifty February 2008 futures were at 5088, at a discount of 49.95 points as compared to spot closing of 5137.45. Derivative contracts for January 2008 series expired today, 31 January 2008.
The NSE's futures & options (F&O) segment turnover was Rs 78,768.81 crore, which was higher than Rs 57,973.91 crore on Wednesday, 30 January 2008.
Reliance Industries February 2008 futures were at premium, at 2501, compared to the spot closing of 2478.90.
Reliance Communications February 2008 futures were at discount, at 590, compared to the spot closing of 598.95.
Reliance Petroleum February 2008 futures were at premium, at 159.40, compared to the spot closing of 158.80.
In the cash market, the S&P CNX Nifty lost 30.15 points or 0.58% at 5137.45.
The Sensex opened with a positive gap of 51 points at 17,810. After moving a notch higher, the index slipped into negative zone and tumbled to a low of 17,418 - down 392 points from day's open in the first hour of trade today.
Fresh buying in frontline stocks saw the index stage a smart recovery, and rallied to a high of 18,009 - up 591 points from the day's low.
Volatility towards the close due to the expiry of the January series of futures & options saw the index settle with a loss of 110 points at 17,649.
The Nifty ended 30 points lower at 5137.
The BSE market breadth was fairly negative - out of 2,792 stocks traded, 1,775 declined, 975 advanced and 42 were unchanged today.
Hindalco and DLF plunged nearly 6% each to Rs 166 and Rs 813, respectively.
ICICI Bank and Mahindra & Mahindra tumbled over 3% each to Rs 1,146 and Rs 669, respectively.
SBI shed 2.6% at Rs 2,162, and ITC dropped 2.2% to Rs 195.
NTPC and ACC slipped nearly 2% each to Rs 198 and Rs 783, respectively.
HDFC and Reliance Communications declined 1.7% each to Rs 2,843 and Rs 602, respectively.
...AND THE MOVERS
Hindustan Unilever (HUL) soared 5% to Rs 207. Bajaj Auto surged nearly 4% to Rs 2,356.
HDFC Bank rallied 2.4% to Rs 1,568. ONGC gained 2% at Rs 988.
Tata Motors, Bharti Airtel and Tata Steel advanced nearly 1.5% each to Rs 706, Rs 864 and Rs 734, respectively.
TCS and Ambuja Cements were up over 1% each at Rs 875 and Rs 120, respectively.
|VALUE & VOLUME TOPPERS|
Reliance topped the value chart with a turnover of Rs 304 crore followed by Reliance Natural Resources (Rs 289 crore), Reliance Energy (Rs 236.20 crore), Reliance Petroleum (Rs 222.75 crore) and Essar Oil (Rs 211 crore).
|Reliance Natural Resources led the volume chart with trades of around 2.12 crore shares followed by Ispat Industries (1.47 crore), Reliance Petroleum (1.38 crore), Essar Oil (92.40 lakh) and IFCI (88.80 lakh).|
NTPC,Bharti Airtel, Bajaj Auto, Hindalco, Aditya Birla Nuvo, Sobha Developers, Lanco Infratech, Andhra Bank, DLF, MTNL, Indian Overseas Bank,Glaxo
NTPC,Bharti Airtel, Bajaj Auto, Hindalco, Aditya Birla Nuvo, Sobha Developers, Lanco Infratech, Andhra Bank, DLF, MTNL, Indian Overseas Bank,Glaxo, Kalpataru Power
There is more in the report
Future Capital Holding 765 340 to 350
Reliance Power 450 150 to 160
Emaar MGF 610 to 690 90 to 100
J. Kumar Infraprojects 110 to 120 Discount
Cords Cable Ind. 125 to 135 8 to 10
KNR Construction 170 to 180 Discount
Onmobile Global 425 to 450 35 to 40
Bang Overseas 200 to 207 30 to 35
Shriram EPC 290 to 330 25 to 30
IRB Infra 185 to 220 60 to 65
The Indian Market closed in the negative territory for the fourth straight trading session. The market opened on a firm note backed by tracking the interest rate cut of 50 basis point by the US Federal Reserve but all of a sudden lost the momentum to pare all its initial gains. The after the volatility gripped the market and the market manages to recover from the fall towards the mid of he session but lost the grip towards the end of the session to close in red. The Mid Cap and Small Cap also fell as selling was also seen from these baskets. The BSE Sensex closed lower by 109.93 points at 17,648.71 while NSE Nifty fell by 30.15 points to close at 5,137.45. The BSE Mid Cap and Small Cap indices also closed lower by 62.44 points and 22.44 points at 7,766.62 and 10,124.42 respectively.
BSE Metal index dropped by 93.41 points to close at 15,312.92. Scrips that fell are Bhushan Steel (13.68%), Hindalco Inds (5.88%), Sh. Precoated (4.82%), JSW Steel (4.02%).
BSE Oil & Gas index grew by 20.64 points to close at 10,705.20. Gainers are IOCL (5.49%), HPCL (2.53%), ONGC (2.05%), BPCL (0.86%) and.
BSE Auto index closed up by 20.02 points at 4,832.48 as Exide Inds (8.47%), Bajaj Auto (3.83%), Cummins India (1.70%), Tata Motors (1.44%), Maruti Suzuki (0.72%).
BSE Capital Goods index closed lower by 238.21 points at 16,387.70. Losers are Elecon Eng (6.69%), Thermax Ltd (4.90%), Crompton Greaves (3.98%), Bharat Elec (3.35%) and Siemens (2.83%).
BSE Bankex index fell by 185.95 points to close at 10,713.91. Scrips that fell are PNB (4.61%), Oriental Bank (4.60%), Allahabad Bank (4.35%), Union Bank (3.36%), BOI (3.42%), ICICI Bank (3.31%).
BSE Realty index slipped by 277.13 points to close at 9,871.06. Scrips that lost are Purvankara (9.68%), DLF (5.76%), Omaxe (3.75%), Sobha Developers (3.24%), Unitech (1.89%).
BSE Power index dropped by 81.40 points to close at 3,741.27 as Power Grid (6.05%), Suzlon Energy (3.66%), Torent Power (3.55%), Tata Power (2.86%), NTPC (1.88%), GMR Infra (1.33%).
It was clearly a volatile trade for Indian markets, which did not mirror the positive news from the Fed?s rate cut; even there was no support from global cues. However Indian markets managed to open in green but immediately slipped into negative zone with mixed response from global front as Asian markets traded in red in early session, ended mixed. Some sort of value buying was seen in counters like Oil & Gas, IT, FMCG and Auto stocks which turned into positive trend. Indices made good sort of recovery from the days low?s but the glimpse did not hold for longer time and again slipped into red on account of heavy profit booking across counter and managed to end with modest losses. The volatility was too because of F&O expiry, where F&O rollover position ended weak, compared to last month. It was a sea saw session for entire day; indices plunged on both the sides. Small & Midcap counter was salient for the day. Power, Metal, Banking and Capital goods were the sectors hit badly. The European markets are trading with hefty losses.
Sensex ended down by 110 points at 17648.711. Weighing on the Sensex were losses in Hindalco (165.75,-6 percent), ICICI Bk (1145.65,-3 percent), SBI (2162.25,-3 percent), ITC (195.2,-2 percent) and Dr Reddys (528.2,-2 percent). Losses were restricted by gains in HLL (206.5,+5 percent), Bajaj Auto (2355.6499,+4 percent), HDFC Bk (1568,+2 percent), ONGC (988.4,+2 percent) and Tata Motors (706.15,+1 percent).
Bajaj Auto Ltd., India's second biggest motorcycle maker reported its fiscal third quarter number where net profit fell 3% despite higher revenue as a sharp rise in input costs and slowing sales hit the profitability of India's second largest motorcycle company. Bajaj sales of motorcycles and three-wheeled auto rickshaws fell 3.3% in the last quarter as higher interest rates crimped demand in a nation where most vehicles are bought on credit. During the quarter net profit stood at Rs 274 cr as against Rs 328 cr in the quarter ended December 2006. Net Sales & Income rose marginally 2.83% to Rs 2696 cr for the quarter ended December 2007 from Rs 2633 cr for the same period last year. Key highlights for the quarter are the Export during nine months ended December 2007 increased by 41% to Rs 1500 cr and launches new 200cc Avenger DTS-I during the quarter. Do read our detailed note.
ACC came out with OK set of numbers for the full year 2007. Company reported 15% increase in full-year net profit benefiting from an all-time high sales volume and the cement sector's outlook which looks positive due to growth nationwide. ACC also added that it will invest Rs 14.5 bn to set up a new clinker line of capacity 7,000 tonnes per day at Chanda in the western Indian state of Maharashtra along with a captive power plant of 25 MW capacity. The project is scheduled for completion by 2010. Valuation seems to be expensive at the current market price in this quarter the cement prices had increased by Rs 5 per bag in southern region. One can enter at dips for a trading opportunity. Do read our analysis on this very soon.
Technically Speaking: Markets traded on weaker supportive breadth with lower volume. Volume for the day was at Rs 5152 cr. Sensex made an intraday high at 18,009 and days low at 17,418. Advance Declines ratio was in favors of Decliners as Advance stood at 989 and Decliners at 1760. Technically Sensex has failed to hold above last week's close of 18,361. We expect selling pressure whenever the markets go close to 18,300-18,400 levels. On the lower side there is a good support at 17,500. Below 17,500 we might see good fall up to 16700 and 16400.
A day after Sensex slipped over 333 points on an all round selling, the market opened on a positive note shrugging off worries about the subprime crises.However, the market was gloomy amid a range-bound trend during intra-day trades influenced by subdued international markets. The Sensex saw strong optimism to vanish after adding 251 points to touch the day's high of 18,009. The market zigzagged between its positives and negatives thereafter, but eased in the afternoon on sustained selling in power, realty and Bankex stocks to touch the intra-day low of 17,418. Heavy buying in most of the index pivotal stocks helped Sensex trim most of its losses towards the close and end the session at 17,649, down 110 points. The Nifty closed with a loss of 30 points at 5,172.
However, the market breadth was in favour of losers as 1,773 stocks declined, 978 stocks advanced and 41 stocks remained unchanged on the Bombay Stock Exchange (BSE). Most of the sectoral indices closed with losses. BSE Realty index and BSE Power index were the major losers and slipped over 2% each. However, BSE Auto index soared 0.42% followed by BSE FMCG, Oil & Gas, Teck index and BSE IT index.
Among the 30 Sensex stocks, 13 ended in the green. Attracting strong buying support, Hind Utilities surged by 5.04% to Rs206.50, Bajaj Auto shot up by 3.83% at Rs2,356, HDFC Bank jumped by 2.35% at Rs1,568, ONGC advanced by 2.05% at Rs988.40, Tata Motors scaled up by 1.44% at Rs706, Bharti Airtel zoomed 1.43% at Rs864 and TCS added 1.11% at Rs875.25. Among the laggards, Hindalco tumbled 5.88% at Rs165.75, DLF slipped 5.76% at Rs812.55, ICICI Bank fell 3.31% at Rs1,145, M&M was down 3.14% at Rs669, SBI lost 2.63% at Rs2,162 and ITC moved down 2.16% at Rs195.20.
Over 2.11 crore RNRL shares changed hands on the BSE followed by Ispat Industries (1.46 crore shares), RPL (1.37 crore shares), Essar Oil (0.92 crore shares) and IFCI (0.88 crore shares).
The market extended losses for fourth straight day in highly volatile trade. Volatile movements in late trade were due to expiry of January 2008 derivative contracts today, 31 January 2008. The market breadth was weak. Reliance group stocks dominated turnover charts
The market had opened on a firm note after the US Federal Reserve slashed the key interest rate by 50 basis points on Wednesday, 30 January 2008 but it had soon lost ground. It staged a strong rebound later in afternoon trade. However, the market was not able to sustain higher levels as European markets were trading lower after positive start. Asian markets were mixed.
The 30-share BSE Sensex declined 109.93 points or 0.62% at 17,648.71. It surged 249.41 points at day’s high of 18,008.05 hit in afternoon trade. Sensex lost 341.01 points at day’s low of 17,417.63 hit in mid-morning trade.
The broader based S&P CNX Nifty was down 30.15 points or 0.58% at 5,137.45.
The BSE Sensex has declined 712.95 points or 3.88% at current 17,648.71 from 18361.66 on 25 January 2008. Nifty has lost 245.90 points or 4.56% at current 5,137.45 from 5383.35 on 25 January 2008
The BSE Mid-Cap index was down 0.80% to 7,766.62 while the BSE Small-Cap index was up 0.22% to 10,124.42
The market breadth was weak: on BSE 1,760 shares declined as compared to 989 that advanced. 40 shares remained unchanged. 16 out of 30 Sensex stocks declined.
The total turnover amounted to Rs 5152 crore on BSE as compared to Rs 4,058.81 crore yesterday, 30 January 2008
Total turnover in NSE’s futures & options surged to Rs 78768.81 crore as compared to Rs 78768.81 crore yesterday, 30 January 2008
Sectoral indices on BSE discplated mixed trend. BSE Metal index (down 0.61% to 15,312.92), BSE FMCG index (up 0.02% at 2,167.34), BSE Consumer Durables index (down 0.59% to 5,103.86), BSE Oil & Gas index (up 0.19% at 10,705.20), BSE Auto (up 0.42% at 4,832.48), BSE IT index (up 0.05% at 3,710.11), BSE TecK index (up 0.10% to 3,280.98), outperformed the Sensex.
BSE Health Care index (down 1.39% at 3,603.52), BSE Power index (down 2.13% at 3,741.27), BSE Bankex (down 1.71% at 10,713.91), BSE Capital Goods index (down 1.43% at 16,387.70), BSE Realty index (down 2.73% at 9,871.06), BSE PSU index (down 0.74% to 8,186.70), underperfomed the Sensex
India’s largest private sector aluminium manufacturer in terms of sales, Hindalco Industries declined 6.02% to Rs 165.50, off day’s high of Rs 175. 11.79 lakh shares changed hands on the counter on BSE. It was the top loser from Sensex pack. Hindalco Industries’ net profit declined 16% to Rs 542 crore on 1.44% fall in total income to Rs 4646 crore in Q3 December 2007 over Q3 December 2006. The results were announced after trading hours yesterday, 30 January 2008.
DLF (down 5.24% to Rs 817), ICICI Bank (down 3.11% to Rs 1148), and State Bank of India (down 2.78% to Rs 2158.75) were the other losers from Sensex pack.
Most IT pivotals gained. Infosys Technoliges (up 1.56% to Rs 1516), Wipro (up 1.65% to Rs 418.90), and TCS (up 1.69% to Rs 880.30) rose. However, Satyam Computer slipped 0.41% to Rs 393.10
India’s largest power generation company in terms of market capitalisation National Thermal Power Corporation lost 2.06% to Rs 197.55. The company said on Wednesday, 30 January 2008 it would invest about Rs 4375 crore ($1.1 billion) in setting up a power plant in north-east India.
India’s second biggest cement maker in terms of total production ACC pared gains from day’s high of Rs 829.70. It settled 2.87% lower at Rs 774.50
Hindustan Unilever, the country’s top FMCG company in terms of sales, surged 5.30% to Rs 207. It was the top gainer from Sensex pack.
Bharti Airtel (up 2.66% to Rs 875), and HDFC Bank (up 1.84% to Rs 1560) were the other gainers from Sensex pack.
India’s second largest bike manufacturer in terms of sales, Bajaj Auto rose 4.68% to Rs 2375, off day’s low of Rs 2230. Bajaj Auto yesterday, 30 January 2008 posted 5.32% fall in net profit to Rs 326.81 crore in Q3 December 2007 over Q3 December 2006
India’s largest oil exploration company in terms of market capitalisation Oil & Natural Gas Corporation advanced 2.53% to Rs 993 on 2.42 lakh shares. As per reports, the Director-General of Hydrocarbons (DGH) has conceded ONGC's demand for a drilling holiday on account of a global rig shortage. The stock moved in a range of Rs 970 and Rs 1034.80 so far during the day
India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) rose 0.70% to Rs 2487 on 12.19 lakh shares. The stock recovered sharply from day’s low of Rs 2375.05. It had hit a high of Rs 2567.70 in afternoon trade.
India's second biggest listed telecommunication services provider by sales Reliance Communications slipped 0.55% to Rs 605 despite posting 48.5% rise in consolidated net profit to Rs 1,372.83 on 29.79% rise in consolidated total income to Rs 4,874.2 crore in Q3 December 2007 over Q3 December 2006. The company announced results during market hours today 31 January 2008.
India’s largest private sector steel maker in terms of total output Tata Steel gained 0.89% to Rs 730 on reporting 0.45% rise in net profit to Rs 1068.58 crore on 10.34% rise in total income to Rs 5040.95 crore in Q3 December 2007 over Q3 December 2006. The results were announced during trading hours today, 31 January 2008.
Reliance Industries topped the turnover charts clocking total turnover of Rs 304 crore followed by Reliance Natural Resources (Rs 289 crore), Reliance Energy (Rs 236.20 crore), Reliance Petroleum (Rs 222.75 crore) and Essar Oil (Rs 211 crore) in that order.
Reliance Natural Resources was the volume topper with total volume of 2.12 crore shares followed by Ispat Industries (1.47 crore shares), Reliance Petroleum (1.38 crore shares), Essar Oil (92.40 lakh shares) and IFCI (88.80 lakh shares), in that order.
Among the side counters, Bhusan Steel (down 17.25% to Rs 1069.90), Brigade Enterprises (down 11.52% to Rs 266), Global Vectra Helicorp (down 10.36% to Rs 112), Indus Fila (down 9.95% to Rs 254), and HTMT Global (down 9.42% to Rs 294), declined sharply.
SEL Manufacturing (up 10% to Rs 236.05), Honeywell Automation (up 18.87% to Rs 2100), ICRA (up 14.86% to Rs 960), Ess Dee Aluminium (up 14.49% to Rs 680), and Amtek India (up 14.22% to Rs 161), advanced.
United Phosphorus jumped 3.82% to Rs 345.25. It reported 85.6% fall in net profit to Rs 7.08 crore on 10.20% rise in total income to Rs 426.15 crore in Q3 December 2007 over Q3 December 2006. The results were announced during trading hours today, 31 January 2008.
IVR Prime Urban Developers surged 4.34% to Rs 282.55 on posting 2365% jump in net profit to Rs 116.32 crore in Q3 December 2007 over Q3 December 2006. The company announced results during market hours today 31 January 2008.
Gillette India rose 4.27% to Rs 919 on posting 12.6% rise in net profit to Rs 31.20 crore on 10.60% rise in net sales to Rs 145.18 crore in Q2 December 2007 over Q2 December 2006. The company announced results after market hours on 30 January 2008.
Indian Oil Corporation surged 6.93% to Rs 487 on reporting 16.7% rise in net profit to Rs 2090.69 crore on 15.89% rise in total income to Rs 65,404.84 crore in Q3 December 2007 over Q3 December 2006. The results were announced during trading hours today, 31 January 2008.
Mphasis fell 2.89% to Rs 225 despite reporting 382.5% surge in net profit to Rs 65.86 crore on net sales rose 244.4% to Rs 449.96 crore in Q3 December 2007 over Q3 December 2006. The results were announced after trading hours on Wednesday, 30 January 2008.
Tata Chemicals slumped 4.13% to Rs 315 after company said it reached an agreement to acquire General Chemical Industrial Products Inc, a US based chemical Company for $1 billion.
Power Grid Corporation of India declined 5.45% to Rs 104. It reported 13.9% rise in net profit to Rs 384.28 crore on 18.80% rise in total income to Rs 1193.77 crore in Q3 December 2007 over Q3 December 2006. The results were announced after trading hours on Wednesday, 30 January 2008.
Container Corporation of India galloped 11.60% to Rs 1730 after the company recommended issue of 1:1 bonus shares.
Key European markets, which opened after Indian market, edged lower after a positive start. Key indices in United Kingdom (down 0.92% to 5,783.60), Germany (down 1.26% to 4,823.14) and France (down 1.03% to 4,823.90) declined.
Asian markets, which opened before Indian market, settled mixed today, 31 January 2008. Japan's Nikkei (up 1.85% at 13,592.17), South Korea's Seoul Composite (up 2.24% at 1,624.68) advanced
However China’s Shanghai Composite (down 0.78% to 4,383.39), Taiwan's Taiwan Weighted (down 0.30% at 7,521.13) and Hong Kong's Hang Seng (down 0.84% at 23,455.74) declined.
US stocks declined on Wednesday, 30 January 2008, led by financial shares, as fears about the US economy's health resurfaced on speculation US bond insurers credit rating could take a hit. The Dow Jones industrial average fell 37.47 points, or 0.30%, at 12,442.83. The Nasdaq Composite index fell 9.06 points, or 0.38%, to 2,349.00.
A credit downgrade of US bond insurers could further harm the banking sector and stunt the global economy as financial institutions take a hit from subsequent write-downs of their assets.
Meanwhile the Securities and Exchange Board of India (Sebi) has decided to reduce the costs for mutual fund investors by doing away with the initial issue fee for close-ended schemes. The Sebi board, which met yesterday, 30 January 2008 also cleared the draft proposal for listing debt securities, eased disclosure norms for existing debt market securities and paved the way for permanent registration of capital market intermediaries.
Jubilant Organosys, Gateway Distriparks, Container Corporation,Cummins India, Blue Star, Crompton Greaves, IOB
Jubilant Organosys, Gateway Distriparks, Container Corporation,Cummins India, Blue Star, Crompton Greaves, IOB
ICICI Bank, Bank of Baroda, Subros, Bajaj Auto, Elder Pharma, Indian Hotels, Indotech Transformers, Crompton Greaves, Bharti Airtel
Cluster: Apple Green
Price target: Rs1,528
Current market price: Rs1,185
All round growth
- ICICI Bank reported a profit after tax (PAT) of Rs1,230 crore for Q3FY2008, an increase of 35% year on year (yoy) and 22.7% quarter on quarter (qoq) on the back of an all round growth. The Q3FY2008 PAT was however marginally below our estimate of Rs1,257 crore.
- During the quarter, the net interest income grew by a strong 32% yoy and 9.7% qoq to Rs1,960 crore primarily driven by an improvement in the net interest margin (NIM) and a strong credit growth.
- The calculated NIM improved by 13 basis points qoq and by six basis points yoy to 2.11%. The NII improved on the back of improved yield on investments, coupled with the cost of funds remaining under control.
- The reported non-interest income (including treasury gains) registered a strong growth of 22.5% yoy on account of a significant growth in the fee income (up 32.7% yoy). Notably, the treasury income declined by 9% yoy to Rs282 crore in Q3FY2008 owing to a provision of Rs150 crore for the mark-to-market provision arising from the credit derivative portfolio.
- Total advances increased by 24.7% to Rs215,517 crore on the back of continued whopping growth in international advances (up 117.6% yoy), while the retail advances growth remained moderate at 12.2%.
- Total deposits reached Rs229,779 crore, up 16.7% yoy, mainly due to a strong 33% growth in the current account and saving account (CASA) balance. A higher CASA balance coupled with a sequential decline in the term deposits, helped improve the CASA ratio by ~2% sequentially and by ~3% yoy to 27.2%.
- Provisioning for the quarter was up 14% yoy in line with the uptick in the non-performing assets (NPA) and the focus on unsecured advances, which offer higher yields.
- The Bank's capital adequacy ratio (CAR) at the end of Q3FY2008 stood at a healthy 15.8% with Tier-1 capital ratio of 12.1% due to the capital raised through the follow-on-public offering in June 2007.
- ICICI bank has received board's approval for the proposed capital raising through stake dilution of upto 15% in ICICI Securities through an initial public offering (IPO) and private placement in three to six months time. ICICI Bank's other subsidiaries also continued to do well gaining market share in their respective spaces.
- At the current market price of Rs1,185, the stock is quoting at 25.6x its FY2009E earnings per share (EPS), 12.5x its pre-provision profit (PPP) and 2.6x FY2009E book value (BV). We maintain our Buy recommendation on the stock with a price target of Rs1,528. ICICI Bank remains one of our top picks in the private sector banking space.
Bank of Baroda
Cluster: Apple Green
Price target: Rs500
Current market price: Rs391
Q3FY2008 results: First-cut analysis
- For Q3FY2008, Bank of Baroda (BoB) reported a profit after tax (PAT) of Rs501 crore, beating our estimate of Rs402.6 crore and the consensus estimate of Rs378.3 crore. The PAT indicates a growth of 52.3% year on year (yoy) and 53.1% quarter on quarter (qoq) primarily driven by a strong growth in the treasury income.
- The net interest income growth was muted at 3.8% yoy to Rs997.5 crore largely due to the continued pressure on the net interest margin (NIM) coupled with a relatively slower credit growth of 23% compared to 27.1% during H1FY2008.
- During the quarter, the deposits grew by 22% yoy to Rs136,900 crore, while the advances rose by 23% yoy to Rs 95,518 crore. With the advances growth outpacing the deposit growth, the CD ratio improved to 69.8% for the quarter from 68.7% for the previous quarter and 69.2% for the year ago period.
- The non-interest income spiked up 85.3% yoy to Rs618 crore on the back of strong treasury gains, thereby supporting the bottom line. The treasury gains for the quarter came in around Rs194 crore, nearly five times the gain in the year ago period.
- The operating expenses growth was contained at 7.1% yoy to Rs683 crore, while on quarter-on-quarter (q-o-q) basis it declined by 14.4%. This was largely due to a 8.5% year-on-year (y-o-y) decline in the staff expenses, offset by a 40% y-o-y jump in the other operating expenses.
- The asset quality remained healthy with the gross non-performing assets (GNPA) declining by to Rs2,040.3 crore, while the net non-performing assets (NNPA) were largely flat at Rs517.2 crore. However, the provisioning coverage declined to 75% for the quarter from 77% for the previous quarter and 78% for the year ago period.
- The bank remains well capitalised with a capital adequacy ratio of 13.5% at the end of December 2007 compared with 12.9% at the end of September 2007 and 12.2% at the end of December 2006.
- In short term, the proposed initial public offering (IPO) of the UTI Mutual Fund should act as a trigger for BoB, as the latter holds 25% stake in the fund. Recent media reports suggest a valuation of about Rs6,500 crore for the UTI Mutual Fund compared with our valuation of Rs4,000 crore.
- At the current market price of Rs391 the stock is quoting at 8.7x its FY2009E earnings per share (EPS), 4.3x its pre-provision profit (PPP) and 1.3x FY2009E book value (BV). We maintain our Buy recommendation on the stock with a price target of Rs500.
Cluster: Ugly Duckling
Price target: Rs68
Current market price: Rs50
- The Q3FY2008 results of Subros are slightly ahead of our expectations.
- The top line of the company grew by 2.2% year on year (yoy) to Rs160.2 crore led by a growth of 15% in the volume and a decline of 11% in the realisation. The realisation dropped because Subros supplied only components for newer models of passenger cars during the quarter instead of full kits comprising compressors as well as components.
- Despite this the operating profit margin (OPM) was maintained at 12.9% which led the operating profits to grow by 1.4% to Rs20.6 crore. The raw material cost as a percentage of sales reduced by 140 basis points to 68% while the staff cost and other expenditures increased.
- A lower other income, and higher interest and depreciation costs led the profit after tax (PAT) to decline by 11.7% to Rs7.2 crore. However, the majority of the capital expenditure (capex) has already been incurred and the company has recently raised low-cost debt. Hence, we expect the interest cost to rationalise going forward.
- Good sales volume growth should lead to a substantial improvement in the OPM going forward. The company has already bagged an order from Suzuki to supply compressors for the latter's new export vehicle. This would boost Subros' FY2009 volumes.
- We are altering our estimates marginally to account for the lower than expected sales due to a substantial decline in the realisations and a higher than expected OPM. The PAT estimates remain unchanged.
- At the current market price of Rs50 the stock is trading at compelling valuations of 6.1x FY2009E earnings per share (EPS) and 3.1x FY2009E enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA). The stock's valuations are at a huge discount to that commanded by its peers. We maintain our Buy recommendation on the stock with a price target of Rs68.
Cluster: Apple Green
Price target: Rs2,635
Current market price: Rs2,269
Price target revised to Rs2,635
- Bajaj Auto Ltd's (BAL) Q3FY2008 results were below our expectations, mainly on the profitability front.
- The company reported a decline of 2.6% in its net sales during the quarter to Rs2,501.7 crore. The overall volumes declined by 3.4%, whereas the average realisation remained flat on a year-on-year (y-o-y) basis and declined by 8.3% on a quarter-on-quarter (q-o-q) basis. This was mainly due to a significant discount offered on Platina.
- The operating profit margin (OPM) for the quarter at 14.5% improved marginally by 30 basis points year on year (yoy), but was down 100 basis points quarter on quarter (qoq). The margin declined in line with the fall in realisation. Consequently, the operating profit for the quarter was flat at Rs363.7 crore.
- Lower taxes, and stable interest and depreciation costs aided a 6% growth in the company's net profit to Rs378.56 crore. Considering the decline in the OPM in Q3FY2008, we downgrade our earnings estimates for FY2008 by 9% and for FY2009 by 12% to Rs114 and Rs127 respectively.
- At the current market price of Rs2,269, the stock trades at 18.5x its FY2009E earnings and is available at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 11.6x. We continue to value BAL on the sum-of-the-parts basis and maintain a Hold call with a revised price target of Rs2,635.
Cluster: Apple Green
Price target: Rs508
Current market price: Rs395
Steady performance continues
- Net sales of Elder Pharmaceuticals (Elder) grew by a strong 19.9% to Rs138.8 crore in Q3FY2008, thereby maintaining the growth momentum seen in the previous quarters. The sales growth was marginally ahead of our estimate of Rs136 crore and was driven by the continued momentum in the company's star brands as well as the new products and line extensions launched by the company over the past one year.
- Elder reported an expansion of 370 basis points in its operating profit margin (OPM), which stood at 21.8% during the quarter. The expansion in the OPM was led by a 230-basis-point reduction in the raw material cost, a 100-basis-point drop in the other expenses and a 50-basis-point decline in the staff cost incurred by the company.
- Consequently, the company's operating profit rose by 44.7% to Rs30.2 crore in Q3FY2008.
- Elder's net profit rose by 30.7% to Rs19.0 crore in Q3FY2008. The growth in the profit was ahead of our estimate of Rs17.5 crore and was robust despite an increase of 63.6% in the interest cost and a rise of 33.4% in the depreciation charge during the quarter.
- Elder is exploring new contract research and manufacturing service (CRAMS) opportunities through its 29 alliance partners. Having executed one such project with its Italian partner, Angelini, the company hopes to get three to four more such manufacturing contracts from Angelini, which will enable it to scale up its CRAMS business.
- At the current market price of Rs395, the stock is quoting at 9.8x FY2008 estimated earnings and 8.7x FY2009 estimated earnings. We maintain our Buy recommendation on the stock with a price target of Rs508.
Indian Hotels Company
Cluster: Apple Green
Price target: Rs180
Current market price: Rs137
Cost controls bring a positive surprise
- Indian Hotels Company Ltd's (IHCL) Q3FY2008 numbers were ahead of our expectations. The company posted a revenue growth of 14.6% year on year (yoy) at Rs520.6 crore. For 9MFY2008, the revenues showed a strong traction, growing by 16.3%yoy to Rs1,206.9 crore on account of a 17.1% and a 13.5% increase in the room sales and the food and beverages (F&B) sales respectively. The growth in average room rates (ARRs) by 15.4% yoy continues to be healthy.
- The operating profit margin (OPM) improved by 511 basis points to 47.0% mainly due to stringent cost controls and increase in ARRs. The total operating expense increased by a minimal 4% yoy. The operating profit thereby grew by 28.5% yoy to Rs244.7 crore.
- The expenditure on interest for the quarter (and nine months) increased by 53.1% to Rs23.9 crore on account of full use of foreign currency convertible bond (FCCB) proceeds for international acquisitions coupled with incremental debt raised.
- Consequently, profit after tax (PAT) for the quarter grew by 31.2% to Rs134.6 crore and that for nine months rose by 29.1% to Rs 242.6 crore.
- IHCL has shown better performance on the revenue front on account of a healthy improvement in ARRs and a steady growth in F&B revenues. We expect consistent growth in foreign tourist inflow, continuous rollout of properties and better economic conditions to drive IHCL's growth. At the current market price of Rs137, IHCL trades at 18.5X its FY2009E earnings per share (EPS) of Rs7.4 (post-dilution on account of the rights issue) for FY2009E. We maintain our Buy recommendation on the stock with a price target of Rs180.
Indo Tech Transformers
Cluster: Ugly Duckling
Price target: Rs830
Current market price: Rs634
Price target revised to Rs830
- For Q3FY2008, Indo Tech transformers Ltd (ITTL) reported a growth of 15.7% in the net sales, which was in line with our expectation. The volume growth remained flat, while the realisation improved significantly for the quarter.
- The operating profit grew by 49.2% year on year (yoy) to Rs17.7 crore, which was above our expectation. The operating profit margin (OPM) expanded by a whopping 770 basis points and was way above our expectation. The improvement in the OPM came mainly on account of reduced raw material cost. The raw material cost as a percentage of sales declined by 770 basis points yoy to 56.5%.
- The interest cost declined by 47.8% to 0.12 crore, while the depreciation charge rose by 32.1% to 0.37 crore.
- Consequently, the net profit margin reported a jump of 67.9% yoy to Rs12.2 crore, ahead of our expectation.
- The order book of the company stood at Rs180 crore, which is executable over the next six-seven month period.
Cluster: Apple Green
Price target: Rs464
Current market price: Rs343
Q3FY2008 results: First-cut analysis
- For Q3FY2008, Crompton Greaves Ltd's (CGL) standalone sales reported a growth of 12.6% year on year (yoy) to Rs915.2 crore. The sales growth was below our expectation.
- The power system business continued to display sluggish growth with revenues growing at 13.1% to Rs473.1 crore. For the nine-month period the power system business grew by 14% against our full year estimate of 22%.
- The consumer product business and the industrial system business continued to grow steadily with a 15% and a 14% growth in the their revenues respectively.
- The operating profit grew by 41.8% to Rs116 crore and the operating profit margin (OPM) improved by 260 basis points yoy to 12.7% as against 10.1% in corresponding quarter last year. The OPM improved due to a decline in the raw material cost. The raw material cost as a percentage of sales declined by 300 basis points yoy to 69.9%.
- The other income during the quarter increased by 99.7% to Rs14.4 crore as against 7.2 crore in Q3FY2008.
- The interest cost was down by 8% to Rs7.2 crore, while depreciation charge was up 15.2% to Rs11.5 crore.
- The net profit grew by 49.5% to Rs67.9 crore mainly on account of high other income. The growth in the net profit was lower than our estimates.
- On a consolidated basis the company reported net sales at Rs1,713.5 crore, while the net profit increased to 82.7crore. The consolidated OPM increased by 80 basis points quarter on quarter to 10.9%. An year-on-year comparison could not be made, as the quarterly consolidated numbers were not reported earlier.
- We would bring to reason the sluggish sales growth especially that of the power system business and revisit our estimates post the analyst conference call on the company. However we maintain our Buy call on the stock.
Cluster: Apple Green
Price target: Rs1,100
Current market price: Rs858
Results ahead of expectations
- Bharti Airtel (Bharti) reported a revenue growth of 9.9% quarter on quarter (qoq) and 41.7% year on year (yoy) to Rs6,963.4 crore during Q3FY2008. The sequential revenue growth was driven by a strong growth of 10.9% in the mobile business, whereas the non-mobile revenues grew by 7.1% qoq to Rs2,194 crore.
- The operating profit margin (OPM) declined by 20 basis points to 42.6% during the quarter. In terms of segments, the margins of mobile and non-mobile businesses declined by 20 basis points and 10 basis points respectively. The operating profit grew by 9.4% qoq and 47.8% yoy to Rs2,963.4 crore.
- The consolidated earnings grew by 6.7% qoq and 41.7% yoy to Rs1,721.4 crore, which is ahead of our and street expectations. The earnings growth was aided by the foreign exchange (forex) fluctuation gains of Rs2.4 crore (compared with a loss of Rs35.9 crore in Q2FY2008). On the other hand, the jump in the effective tax rate to 8.2% (up from 6.5% in Q2) limited the sequential growth in earnings.
- In terms of operational metrics for the mobile business, Bharti reported a record net addition of 6.3 million subscribers during the quarter, taking its subscriber base to 55.2 million as on December 31, 2007. The average revenue per unit (ARPU) declined by 2.2% qoq to Rs358 and the total minutes of usage increased at a lower-than-expected rate of 14.7% qoq to 73.8 billion minutes. Consequently, the average revenue per minute declined by 3.3% to Rs0.76 (down from Rs0.79 in Q2FY2008) and the spread per minute declined by 3.7% to Rs0.31 (compared with Rs0.32 in Q2FY2008). The company's overall market share stood at 23.6%, a 20-basis-points improvement over 23.4% reported in Q2FY2008.
- In terms of key highlights, the company has joined hands with Vodafone and Idea to pool in their passive infrastructure in 16 circles under a new entity Indus Towers. Bharti Infratel Ltd (BIL), subsidiary of Bharti, would hold a 40% stake in Indus Towers. This is a positive development in terms of limiting the incremental capital expenditure of the joint venture partners. Apart from this, Bharti Infratel (with 22,000 towers in circles other than 16 covered by Indus Towers) has raised $1 billion through placement to the leading foreign institutions. BIL has been valued in the range of $10-12.5 billion depending on the actual performance in FY2009.
- The company is entitled for additional spectrum in 10 circles under the new Telecom Regulatory Authority of India (TRAI) norms and has already received formal intimation for five circles. It expects to launch DTH and IPTV services in the first half of FY2009.
- To factor in the better-than-expected performance in Q3, we are upgrading our earning estimates by 4.1% and 2.7% for FY2008 and FY2009 respectively. At the current market price the stock trades at 24.3x FY2008 and 19.6x FY2009 estimated earnings. We maintain our Buy call on the stock with a price target of Rs1,100.