Macquarie Research:: Stock plays on our bullish commodities

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Commodity Conference Note
Stock plays on our bullish commodities
theme
Global macroeconomic picture is strong for 2011
 Macquarie Economics expects 2011 to be a strong year for global economic
growth, with world GDP forecast to reach at least 4.2%. The US economy should
be a particular standout. Macquarie expects it to show robust reacceleration in
2011, with real GDP growth of at least 3.5%. Strong momentum heading into the
New Year, very loose monetary policy and late fiscal stimulus should be powerful
catalysts. In our view, this strong growth outlook creates a very favourable
environment for risk assets, including commodities.
Bullish stance on crude oil prices stays put – recommend
HAL, APA, PXD, WNR and XOM

Energy India -Crude oil prices: Continue to rise in January:: Kotak Securities

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Energy
India
Crude oil prices: Continue to rise in January
Global refining margins: Improve led by strong diesel cracks
India marketing margins: Higher marketing losses

Add IDFC -Moderating growth traction, retain positive view :: Kotak Sec

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IDFC (IDFC)
Banks/Financial Institutions
Moderating growth traction, retain positive view. We believe that IDFC’s loan
growth will likely moderate in the near term though management remains confident on
achieving its medium-term growth target. Income from non-lending avenues is primarily
linked to capital markets and will likely remain under pressure if disbursements slow
down or equity markets remain weak. Recent correction in the stock price is steep and
more than offsets the impact of lower near-term traction. Retain ADD.

Reduce Sun Pharmaceuticals -Margin pressure here to stay , ICICI Securities

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Sun Pharmaceuticals -Margin pressure here to stay … 
Sun Pharma came out with disappointing numbers for Q3FY11. The
numbers are not comparable YoY and QoQ due to consolidation of Taro
Pharmaceuticals. Net sales zoomed 56.8% YoY to  | 1601.1 crore
compared to our expectation of  | 1495.1 crore. Excluding sales from
Taro, the topline was up just ~12% YoY. As EBITDA margins on the
Taro front were ~20%, much lower compared to Sun‘s base business
(~33%), overall EBITDA margins declined by 860 bps to 27.5%. Higher
taxation and depreciation further restricted growth in net profit to mere
3.3% at | 350.1 crore (compared to our expectation of | 442.7 crore). As
uncertainty remains for Caraco resolution and overall pressure on
margins will continue, we are maintaining our REDUCE rating.

Buy Jet Airways- Almost in line : Kotak Securities

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Jet Airways (JETIN)
Others
Almost in line. Jet reported 3QFY11 consolidated EBITDA at Rs6.68 bn (+31% yoy,
+56% qoq) vs our estimates at Rs6.95 bn. The major reason for the slight
disappointment is lower-than-estimated profitability of the international segment led by
lower-than-estimated PLF (80.5% vs our estimates at 82.5%). The domestic business
performed slightly better than our expectations. We maintain BUY with a target price of
Rs850 (Rs1,220 previously).

Weekly US oil data -Event risk: Egypt and beyond :: Macquarie

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Weekly US oil data
Event risk: Egypt and beyond
One week ago, crude oil markets were softening, prices correcting and bearish
indicators sprouting. Tumultuous regime change in Egypt changed all that in the
proverbial heartbeat. Short-sellers were caught out. Brent prices effortlessly scaled
US$100 in four short days -- and have held on to those gains to date. So far the
worry about instability mostly involves rising transportation cost, as cautious shippers
may decide to take a 6000 mile long detour around Africa with some part of the
roughly 2 million barrel per day of oil that normally transits the Suez Canal.

Reduce Voltas -Results below expectations; Margins disappoint: Kotak Sec

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Voltas (VOLT)
Industrials
Results below expectations; Margins disappoint. Disappointing results with revenue
of Rs10.4 bn (up 5% yoy) and margins of 7.6% (down 140 bps yoy). Disappointment
led by EMP segment with 3% revenue decline and lower-than-expected margins (250
bps yoy decline). Strong revenue growth in UCP and Engg segments but Engg margins
significantly below expectations. Order inflows of Rs5 bn in 3Q and Rs22 bn in 9MFY11
suggest risk to full year estimate of Rs31 bn. Revise estimates, retain REDUCE.

Add Kotak Mahindra Bank: Banking profitability lower than estimated… ICICI Securities

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Kotak Mahindra Bank -Banking profitability lower than estimated… 
Net Profit at |187.8 crore for standalone bank was lower than estimated
due to higher opex, majorly from 25 years completion add campaigns and
mid year increments. Robust growth of 35% in credit and 28% in deposits
on a y-o-y basis led to growth in NII of 17% y-o-y to | 571 crore. Financing
segments both bank & Kotak Prime remain major contributors to
consolidated PAT which grew 16% y-o-y and 5% q-o-q to | 383.6 crore.

Edelweiss: Buy IVRCL Infrastructure - Concerns remain but stock correction overdone

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IVRCL Infrastructure (IVRC IN, INR 74, Buy)

n  Concerns remain but stock correction overdone

We see two major concerns in IVRCL: 1) Double whammy of execution slowdown and rise in interest costs, impacting profits in the construction business; and 2) funding issues in IVR Assets business. However, we believe these concerns are now priced in with ~50% fall in stock price in the past three months. We estimate that the core construction business is now available at 6.5x implied FY11 P/E on our revised estimates, similar to the levels during 2008 crash.

FII & DII trading activity on NSE and BSE as on 04-Feb-2011

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FII trading activity on NSE and BSE on Capital Market Segment

The following is combined FII trading data across NSE and BSE collated on the basis of trades executed by FIIs on 04-Feb-2011.

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) Category Date Buy Value Sell Value Net Value FII 04-Feb-2011 2544.42 2400.38 144.04

Domestic Institutional Investors trading activity on NSE and BSE on Capital Market Segment

The following is combined Domestic Institutional Investors trading data across NSE and BSE collated on the basis of trades executed by Banks, DFIs, Insurance, MFs and New Pension System on 04-Feb-2011.

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) Category Date Buy Value Sell Value Net Value DII 04-Feb-2011 1621.58 1384.13 237.45

 

 

FII DERIVATIVES STATISTICS FOR 04-Feb-2011

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FII DERIVATIVES STATISTICS FOR 04-Feb-2011
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	86900	2363.67	101835	2770.55	449424	12069.38	-406.88
INDEX OPTIONS	281834	7599.22	242610	6658.36	1886249	50882.88	940.87
STOCK FUTURES	83141	2205.15	71432	1895.98	1170292	28471.84	309.17
STOCK OPTIONS	19929	565.12	19798	561.21	21647	582.16	3.91
						Total	847.06

 

 

Add GlaxosmithKline Consumer - Impresses, yet again:: Kotak Sec

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GlaxosmithKline Consumer (SKB)
Consumer products
Impresses, yet again. 4Q results beat estimates line by line. Dividend payout of 70%
for CY2010 (including special dividend of Rs25) is a key positive. The results were a
demonstration of (1) continuing penetration led growth, (2) new-found confidence in
implementing price increases, (3) no meaningful competition in MFD (malted food
drink) and (4) efforts to diversify its product portfolio (within MFD and noodles) are
yielding results. Key monitorable are (1) likely announcement of CY2011-14E targets,
(2) repositioning of Horlicks as a health food and not just a health drink and (2)
continuing success of Foodles. Maintain ADD, GSK remains one of our preferred picks.

McNally Bharat Engineering:: Add Target :Rs 238:: ICICI Securities

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McNally Bharat Engineering: High on visibility…
Multiple sector exposure, strong sales visibility and impressive
expansion plans make McNally Bharat Engineering (MBE) an attractive
play in the domestic capital goods sector. Having successfully executed
several BOP and material handling  equipment (MHE) projects, MBE is
gradually transitioning itself into a full-scale EPC contractor. We expect
the improved domestic economic outlook and continued emphasis on
infrastructure development by the government to drive order inflows
over the next few years. We are initiating coverage with an ADD rating.

Buy IDBI Bank -Consolidation: profitability at cost of growth? ICICI Securities

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IDBI Bank -Consolidation: profitability at cost of growth? 
Muted business growth of 12% YoY (flat QoQ), sluggish CASA
mobilisation, high NIM at 2.28%, lower employee costs, higher credit
costs due to GNPA rising 22% QOQ (provision for NPA at | 490 crore) and
deferred tax credit of | 278 crore all led to higher than expected profit of |
454 crore (58% YoY jump) for IDBI Bank in Q3FY11. Deposits de-grew 3%
QoQ (inched up 5% YoY) to  | 1,50,239 crore, advances rose 21% (3%
QoQ) to | 134491 crore leading to NII rising 68% YoY (3% QoQ) to | 1204
crore and NIM being maintained high QoQ at 2.28%. The bank is
consolidating with the aim of increasing its CASA, which is currently flat
QoQ at 15% to 18% by March and 20% by FY12E. Moreover, since it plans
to reduce its current bulk deposit share (at ~ 65%), it aims to slow down
the loan book growth to 10% for FY11E (focusing on infrastructure sector
disbursements and priority sector lending). We expect consolidation in
FY12E leading to 12% CAGR in the business mix over FY10-12E.

NSE, Bulk deals, 04-Feb-2011

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Symbol	Security Name	Client Name	Buy / Sell	Quantity Traded	Wght. Avg.  Price
ALPSINDUS	Alps Industries Ltd.	RELIGARE FINVEST LTD	SELL	2,64,942	4.20
BFUTILITIE	BF Utilities Limited	CROSSEAS CAPITAL SERVICES PVT. LTD.	BUY	5,58,932	864.40
BFUTILITIE	BF Utilities Limited	CROSSEAS CAPITAL SERVICES PVT. LTD.	SELL	5,58,932	863.73
EMAMIINFRA	Emami Infrastructure Ltd	MAN MOHAN DAMANI	BUY	3,00,000	32.50

Commodity price momentum continued in January: Macquarie Research

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Commodities Comment
Commodity price momentum continued in January
Feature article
 We review commodity price and inventory performance in January. Prices
continued their momentum into 2011, as a continually improving demand
outlook combined with supply disruption bolstered fundamentals. Copper, iron
ore and tin recorded all-time record monthly average nominal prices.

Buy Everest Kanto Cylinders -Robust growth in international sales… ICICI Securities

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Everest Kanto Cylinders -Robust growth in international sales… 
Everest Kanto’s Q3FY11 performance was better than our expectations
with the sales growing by ~17% (YoY) to  |.197.4 crore against our
expectation of ~8% growth only. Higher growth was led by robust
sales in the international business that grew by ~65% (YoY) during the
quarter. Also, margins improved significantly by 600 bps to 19.1% in
Q3FY11 from 13.1% in Q3FY10. Improvement in EBITDA margins
coupled with lower interest cost and depreciation provisioning led to
the higher earnings of  |  23 crore in Q3FY11 against  |1.4 crore in
Q3FY10.

Strong Buy: JBF Industries: BOPET films deliver a stellar performance…ICICI Sec

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JBF Industries: BOPET films deliver a stellar performance… 
JBF Industries’ (JBF) Q3FY11 results were well ahead of the street and our
estimates on the back of a superior performance in the BOPET films
segment. Standalone net sales increased 41% YoY to | 845 crore lower
than our estimated | 1054.2 crore on the back of a lower volume and
value growth in the textile grade chips segment. It reported a standalone
EBITDA margin of 13.4% (up 131 bps and 195 bps QoQ and YoY,
respectively). PAT growth was relatively muted at 16.9% YoY to | 29.8
crore lower than our estimated | 55.2 crore due to a forex loss of | 34.3
crore. A 62.9% and 16.8% increase in BOPET films and pet chips
realisation respectively, led to a YoY growth of 44.0% and 192.1% in
consolidated net sales and EBITDA respectively. Consolidated PAT grew
by over six times to | 185.6 crore.

Accumulate DB Corp -Marathi Paper launch , Kotak Sec,

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DB CORP
 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.312
FY12E P/E: 17.2X
In an analyst meet held yesterday, DB Corp announced changes to its
growth plans. The company has announced that it would be launching a
daily newspaper in Marathi in FY2012. Given that the company would face
margin pressures on account of editions in Jharkhand as well as (yet to be
launched) Marathi editions, the management has deferred the launch of
Dainik Bhaskar in Bihar.

Kotak Sec, India strategy Update

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MARKET STRATEGY
Domestic markets continued to remain weak since the beginning of the
month led by continued FII selling. Lower than expected IIP data coupled
with higher inflation figures prompted further selling from the domestic
and foreign institutions. High food inflation and soaring global commodity
prices continued to play spoilsport. Thus, RBI also hiked the key interest
rates to tame inflation and also raised inflation forecast for current fiscal by
150 basis points to 7%.

Economy, Corporate & Business News: Kotak Sec: 4 Feb 2011

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Economy News
4 Food inflation, as measured by the Wholesale Price Index (WPI), rose to
17.05% for the week ended January 22, primarily due to rising prices of
vegetables, particularly onions. Food inflation stood at 15.6% in the
previous week ended January 15, and was at 20.56 per cent during the
corresponding period in 2010. (BS)
4 India may need to import 142 mn tonnes of coal next fiscal to bridge the
estimated shortfall in domestic production, well above the 82.33 mn
tonnes of imports slated this fiscal. The Coal Minister, Mr Sriprakash
Jaiswal, said on Thursday that coal demand next fiscal is likely to be
around 696 mn tonnes, while the output is pegged at just 554 mn tonnes.
(BL)

BSE, Bulk deals, 4/2/2011

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Scrip Code	Company	Client Name	Deal Type *	Quantity	Price **
532435	Asia HR Tech	TELESYS SOFTWARE LTD	S	50000	5.51
533303	BF Invest	JMP SECURITIES PVT LTD	B	310797	114.36
533303	BF Invest	JMP SECURITIES PVT LTD	S	310797	114.31
532430	BF Utilities	H P SHARE SHOPPE	B	307038	864.24

Clients, NRI, Proprietary trading activity 2/4/2011

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(Rs. crore)	Clients
Trade Date	Buy	Sales	Net
4/2/2011	2,506.03	2,501.81	4.22
3/2/2011	2,160.65	2,549.27	-388.62
2/2/2011	2,162.15	2,405.53	-243.38
Feb , 11	9,113.28	9,693.00	-579.71
Since 1/1/11	55,395.26	55,842.92	-447.65
(Rs. crore)	NRI
Trade Date	Buy	Sales	Net
4/2/2011	1.24	0.33	0.91
3/2/2011	1.68	0.59	1.09
40576	1.18	0.51	0.67
Feb , 11	5.42	3.24	2.18
Since 1/1/11	31.19	30.12	1.07
(Rs. crore)	Proprietary
Trade Date	Buy	Sales	Net
4/2/2011	703.67	770.31	-66.64
3/2/2011	665.86	627.26	38.6
40576	704.73	685.33	19.4
Feb , 11	2,774.62	2,825.76	-51.14
Since 1/1/11	16,267.41	16,501.47	-234.06