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Markets continue on the upward trajectory
The Indian markets broke the losing trend this week, with the Sensex gaining
0.8% and the Nifty gaining 0.7% during the week. The 3QFY2011 results
announced during the week were broadly in line with market expectations.
India's food inflation, however, continued to remain a worry, remaining high
at 15.5%, although it was lower than 16.9% during the previous week. BSE
mid-cap and small-cap indices underperformed the large-cap indices during
the week, falling 0.4% and 0.5%, respectively. On the sectoral front, the BSE
Bankex was the biggest gainer, up 4.2%, followed by the BSE IT index, up
3.0%. The BSE oil and gas index lagged the other indices, losing 2.3% of its
value during the week.
Bankex outperforms the Sensex
The BSE Bankex grew by 4.2% during the week, outperforming the Sensex.
On the back of strong results of banks like Axis Bank, PNB and Bank of
India, banking stocks bounced back as concerns regarding margin
compression on account of higher deposit rates were to an extent allayed
by the sequential NIM expansion in case of almost all the banks, which
announced their results. Also, concerns on the asset-quality front subsided
a bit with results showing an improving asset-quality trend with lower slippages
and improving provision coverage for most of the banks. Among
private banks, we have a positive view on ICICI Bank and Axis Bank; amongst
the large PSU banking space, we prefer SBI and BoB; and among midcap
banks, we prefer Dena Bank, J&K Bank and Indian Bank.
Inside This Weekly
Axis Bank - 3QFY2011 Result Update: For 3QFY2011, Axis Bank registered
net profit growth of 35.9% yoy to `891cr, which was better than our estimate
of `837cr, mainly on account of better-than-estimated NIMs and trading
profit. Strong sequential growth in retail and large corporate segments in
both assets as well as fees, together with declining slippages and higher
provision coverage, were the key positives of the results. We maintain our
Buy recommendation on the stock with a Target Price of `1,688.
Larsen & Toubro - 3QFY2011 Result Update: Larsen and Toubro (L&T)
posted mixed set of numbers for 3QFY2011. The company has maintained
its revenue guidance of 20% for the full year, which we believe is achievable.
However, according to us, L&T would find it tough to meet its guidance of
25% on the order inflow front (implying order inflow of `37,509cr, a 57%
yoy jump) for the year, and it could see some slippage. We recommend Buy
on the stock with a Target Price of `1,964.
RIL - 3QFY2011 Result Update: RIL reported 28.1% yoy growth in
its bottom line on account of higher refining and petchem margins. On a
sequential basis, PAT grew by mere 4.3% on account of the dip in natural
gas output from KG-D6 and lower refining volumes. The top line increased
by 5.2% yoy on the back of 9.4% yoy growth in refining and an 8.2% yoy
increase in petchem revenue. We maintain Buy on RIL with an SOTP-based
Target Price of `1,160.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Markets continue on the upward trajectory
The Indian markets broke the losing trend this week, with the Sensex gaining
0.8% and the Nifty gaining 0.7% during the week. The 3QFY2011 results
announced during the week were broadly in line with market expectations.
India's food inflation, however, continued to remain a worry, remaining high
at 15.5%, although it was lower than 16.9% during the previous week. BSE
mid-cap and small-cap indices underperformed the large-cap indices during
the week, falling 0.4% and 0.5%, respectively. On the sectoral front, the BSE
Bankex was the biggest gainer, up 4.2%, followed by the BSE IT index, up
3.0%. The BSE oil and gas index lagged the other indices, losing 2.3% of its
value during the week.
Bankex outperforms the Sensex
The BSE Bankex grew by 4.2% during the week, outperforming the Sensex.
On the back of strong results of banks like Axis Bank, PNB and Bank of
India, banking stocks bounced back as concerns regarding margin
compression on account of higher deposit rates were to an extent allayed
by the sequential NIM expansion in case of almost all the banks, which
announced their results. Also, concerns on the asset-quality front subsided
a bit with results showing an improving asset-quality trend with lower slippages
and improving provision coverage for most of the banks. Among
private banks, we have a positive view on ICICI Bank and Axis Bank; amongst
the large PSU banking space, we prefer SBI and BoB; and among midcap
banks, we prefer Dena Bank, J&K Bank and Indian Bank.
Inside This Weekly
Axis Bank - 3QFY2011 Result Update: For 3QFY2011, Axis Bank registered
net profit growth of 35.9% yoy to `891cr, which was better than our estimate
of `837cr, mainly on account of better-than-estimated NIMs and trading
profit. Strong sequential growth in retail and large corporate segments in
both assets as well as fees, together with declining slippages and higher
provision coverage, were the key positives of the results. We maintain our
Buy recommendation on the stock with a Target Price of `1,688.
Larsen & Toubro - 3QFY2011 Result Update: Larsen and Toubro (L&T)
posted mixed set of numbers for 3QFY2011. The company has maintained
its revenue guidance of 20% for the full year, which we believe is achievable.
However, according to us, L&T would find it tough to meet its guidance of
25% on the order inflow front (implying order inflow of `37,509cr, a 57%
yoy jump) for the year, and it could see some slippage. We recommend Buy
on the stock with a Target Price of `1,964.
RIL - 3QFY2011 Result Update: RIL reported 28.1% yoy growth in
its bottom line on account of higher refining and petchem margins. On a
sequential basis, PAT grew by mere 4.3% on account of the dip in natural
gas output from KG-D6 and lower refining volumes. The top line increased
by 5.2% yoy on the back of 9.4% yoy growth in refining and an 8.2% yoy
increase in petchem revenue. We maintain Buy on RIL with an SOTP-based
Target Price of `1,160.
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