19 May 2011

Result Reviews DB Corp. - 4QFY2011:: Angel Broking

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Result Reviews
DB Corp.
For 4QFY2011, DB Corp. reported strong top line with consolidated revenue growth of
23.4% yoy/12.8% qoq to `317cr (`257cr/`281cr). Advertising revenue grew by 30.6% yoy
(down 11.6% qoq) to `249cr (`190.7cr/`281.7cr), while circulation revenue grew
marginally by 1.3% yoy (down 1.1% qoq) to `53.4cr (`52.7cr/`54cr). The decline in
advertisement revenue on a sequential basis was expected on account of consolidation of
high base (as 3Q consolidated the entire festive season for FY2011); however, the decline
in circulation revenue on a sequential basis may hint at market share losses. Recurring
consolidated earnings grew strongly by 29% yoy (down 7.7% qoq) to `45cr (`35cr/`50cr),
aided by a decrease in interest expense (down 60.8% yoy/61.5% qoq, as the company
repays its debt) and lower tax rate (down 177bp yoy/349% qoq). On the operating margin
front, the company faced margin pressures on account of gross margin contraction (gross
margin contracted by 216bp yoy/279bp qoq), increased staff cost (up 149bp yoy/352bp
qoq) and higher SG&A expense (up 21bp yoy/318bp qoq). The SMEL demerger was also
consolidated during the quarter. A detailed note would be released post the conference
call with the management. The stock is currently under review.

Aurobindo Pharma redeems zero coupon FCCBs :: Angel Broking

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Aurobindo Pharma redeems zero coupon FCCBs
Aurobindo Pharma had issued FCCBs in two tranches aggregating to US$150mn
(Tranche-A) in May 2006 and second tranche of US$50mn (Tranche-B) in May 2006. After
the repurchase and cancellation of FCCBs from time to time, the outstanding nominal
value of FCCBs has been paid in full at the respective redemption prices of the principal
amount on maturity date i.e. May 17, 2011, as per the terms and conditions of the
offering circular dated May 12, 2006. The company has paid an aggregate amount of
US$203.86mn for both aforesaid tranches. For the repayment, US$70mn was through
internal accruals and the remaining was through debt. Pursuant to this, there are no
outstanding bonds as on date. The stock is currently trading at 12.4x and 10.1x its
FY2012E and FY2013E earnings, respectively. We maintain our estimates and recommend
Buy on the stock with a target price of `278.

UBS:: Reliance Industries - Upgrade to Buy on recent weakness ; Rs 1,170 target

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UBS Investment Research
Reliance Industries
U pgrade to Buy on recent weakness
􀂄 Event: Stock down to attractive levels, upgrade to buy
RIL is down 11% in 1MTD on: 1) uncertainty on KG-D6 gas volumes ,2) lower
petchem/refining contribution in 4QFY11 results. Going forward, we see little
downside on gas volumes and attribute the lower commodity contribution in
4QFY11 to the unscheduled shutdown which will reverse. As a result of higher
capacity utilization we hike our PT by 5% and our EPS estimates by 6% for both
FY12 and FY13

Kalpataru Power:: Execution focus in FY12 􀂃 BNP Paribas

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Execution focus in FY12
􀂃 KPP's sales weak on execution delays, JMC execution picks up
􀂃 KPP's margins maintained at 11%, margin compression at JMC
􀂃 Order backlog of INR99.8b to drive strong top-line growth in FY12E
􀂃 BUY for inexpensive valuations and diversified business mix

Larsen & Toubro:: Execution weak, but order flows exceptionally strong : JP Morgan

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Larsen & Toubro
Overweight
LART.BO, LT IN
Execution weak, but order flows exceptionally strong


• L&T pre-exceptional parent PAT of Rs14.4B (up 8% YoY) came in
below our estimate of Rs16B. Revenue at Rs151B (up 13%) fell short of
estimate of Rs163B and OPM at 15.1% was just a shade below our
estimate of 15.3%. On the whole, execution has continued to disappoint
in 4Q but margins were in-line.

WPI Inflation Declining food inflation and rising cost pressures::Ambit

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WPI Inflation

Declining food inflation and rising cost pressures
Inflation in April 2011 fell to 8.7% YoY from 9.4% in March 2011 on account of a decline in food inflation. The fall is attributed to the decrease in manufactured items (from 7% to 6.2%), crude oil (from 6.3% to 1.9%), minerals (from 12.2% to 7.4%), non-food articles (primarily fibers) and fruits. While there has been marginal decrease in manufactured product inflation to 6.2% YoY in April, the broader assessment indicates intensifying margin pressure and low pass-through coefficient. While the risk of further escalation of costs persists, we believe further monetary tightening could hamper the growth outlook.
m      Primary food inflation falls to 8.7% YoY, while overall food inflation rises 7.6%: The decline in primary food inflation to 8.7% in April 2011 (from 9.5% in Marchwas on the back of a 0.4% MoM decline in the high-protein components index – eggs, meat & fish (EM&F), 1.7% MoM decline in condiment & spices, which followed a 7.5% MoM fall in March 2011. Tea prices have fallen 5.4% MoM in April 2011.  Overall, there has been a declining trend in EM&F index, while milk prices rose by 0.9% MoM in April 2011. During summer, declining supply is the driving force in determining milk prices whereas slower demand is the driving force in determining EM&F prices. However, the fruits & vegetable index rose by 10.3% MoM (vegetable 2.2% and fruits 15.7%), followed by other food articles index by 2.4% MoM. Inclusive of the 0.5% MoM rise in manufactured food index the overall food inflation rose marginally to 7.6% YoY in April 2011 (from 6.8% YoY in March 2011).
m      Increase in primary raw material cost: For the month of April, the non-food primary articles rose by 1.8% MoM on the back of a steep 7.2% MoM rise in raw rubber and broad-based increase in prices of items like oil seeds (1.4% MoM).  Raw rubber index has been rising consistently since September 2010 by nearly 44 %. Other non-food article index rose by 3.6% MoM in April on the   back of a rise in prices of several products: sugarcane 7.2%, logs and timber 4.6%, gaurseed 3.8%. However, the prices of gingelly seed declined 18% MoM and fodder dipped 2.7%. 
m      Fuel cost is still a risk: Following the 8% hike in petrol prices by Rs5/lit on 15th May 2011, there is a strong possibility of price hikes for diesel, LPG and kerosene given the ballooning under-recoveries of oil PSUs. Assuming 10% hike in diesel price, the cumulative impact of hikes in petrol and diesel prices will translate into 60bps increase in YoY inflation, implying a rebound in inflation to over 9%. Hence, critical risk on the cost side can potentially originate from the sustained firmness on global crude prices, with crude Brent prices hovering around US$113/bbl.    
m      Pass through coefficient didn’t change despite a fall in material cost (primary ex- food): The manufactured product inflation decreased to 6.2% YoY in April 2011 (vs 7% a month back). The decrease in the cost of raw materials dipped to 20% YoY in April 11 from 21% a month back for primary ex-food. However, fuel prices rose by 13.3% YoY in April11. The pass through coefficient (12 average elasticity of manufactured product inflation-ex food, gold and silver w.r.t. primary-non food inflation) remains the same. The pass through coefficient remains at 0.08% for the month of April 11.
m      Only few sectors have demonstrated rise in pricing power: Overall, except for edible oils, we see slower and proportionately lower response of product prices to the rise in input cost. This is particularly evident in the case of automotives and cotton textiles. Declining pass-through for automobile industries (1.8% YoY inflation) is surprising and possibly reflects intense competitive pressure. At 24.7%YoY cotton textile inflation is much smaller compared to the 101.2% YoY spike in raw cotton prices and is symptomatic of severe margin pressure.
m      RBI may tighten interest rate by 25bps to rein in inflation to desired level: The 50bp hike in policy rates in April 2011 was justified by RBI as an appropriate response to strengthening pricing power in the manufacturing sector.  However, our pass-through estimation does not substantiate the same. While the recent correction in commodity prices is reassuring, the potential for moderation in inflation in the near term will be constrained by escalation in fuel prices and its spill over impact on the broader economy.  While we believe that inflation numbers can potentially bounce back to 9% level in the coming months in line with RBI’s guidance till September 2011, overstatement of pricing power by the central bank and aggressive rate hikes can hurt growth significantly. However, given RBI’s hawkish stance there is still a possibility of another 25bps hike.

19 May 2011:: Economic and Political News 􀂄 events: Angel Broking

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Economic and Political News
􀂄 Decision on FDI in multi-brand retail soon: Minister of State for Commerce
􀂄 DEPB tax incentive scheme for exports ends
􀂄 Power slippage to face scrutiny of Cabinet secretary
􀂄 Government to plug black money loophole in infra debt funds
Corporate News
􀂄 RIL seeks out-of-court settlement with SEBI on insider trading charges
􀂄 Reliance ADAG to invest US$5-10bn in Indonesia mines
􀂄 IL&FS Engineering bags US$100mn contract in UAE
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

L&T bags an order worth `1,450cr :Angel Broking

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L&T bags an order worth `1,450cr
Larsen & Toubro (L&T) has bagged an offshore process platform order in KG basin worth
`1,450cr from Gujarat State Petroleum Corporation (GSPC). This is a second contract
received by L&T from GSPC. Last year, L&T had received GSPC’s first offshore wellhead
platform contract for the development of Deen Dayal West field in KG basin. With this
order, the outstanding order book stands at ~`1,20,932cr (2.7x FY2011E revenue),
thereby providing revenue visibility.

Market Outlook India Research May 19, 2011 - Angel Broking

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Dealer’s Diary
The key benchmark indices posted modest losses with data showing resumption
of selling by foreign funds and rise in crude oil prices weighing on the
sentiment. Stocks were volatile right from the onset of the trading session. The
market reversed direction soon after initial gains in the morning trade. The
market moved between the positive and negative zone in mid-morning trade.
Volatility was the order of the day as the key benchmark indices recovered soon
after hitting their eight-week lows in afternoon trade. The market was range
bound in late trade. The Sensex and Nifty closed down by 0.3% each. The
mid-cap and small-cap indices registered loss of 0.6% and 0.8%, respectively.
Among the front liners, HDFC, Hero Honda, Maruti Suzuki, Wipro and Tata
Power gained 1–2%, while Reliance Infra, Tata Motors, RCOM, SBI and
JP Associates lost 2–4%. Among mid caps, Shoppers Stop, Bajaj Finserv,
Eclerx Serv, Ramky Infra and Shree Global Traders gained 4–10%, while
Kwality Dairy, Anant Raj Inds, Opto Circuits, Punj Lloyd and NCC lost 5–10%.

Derivative Report India Research May 19, 2011

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Comments
 The Nifty futures’ open interest increased by 0.74%
while Minifty futures’ open interest increased by
2.95% as market closed at 5420.60 levels.
 The Nifty May future closed at a premium of 3.45
points, against a premium of 8.45 points in the last
trading session. On the other hand, June future
closed at a premium of 14.20 points.
 The Implied Volatility has decreased from 18.74% to
18.45%.
 The PCR-OI has decreased from 0.90 to 0.89 points.
 The total OI of the market is `1,52,083cr and the
stock futures OI is `34,747cr.
 Few liquid counters where cost of carry is positive
are GTLINFRA, GTOFFSHORE, GTL, ALOKTEXT and
RANBAXY.

May-19-'11:: Buzzing Stocks- Keynote Capitals

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Buzzing Stocks
·      Galaxy Surfactants Ltd. has withdrawn the IPO one day before its official closing date due to poor response.
·      Dabur plans to invest up to `200Cr this fiscal to expand operations, which will include setting up three new factories overseas by next year.
·      SBI has said that its pension liability is more than `11,700Cr as on March 2011.
·      Vaswani Ind’s lPO listing will delay due to ongoing investigation as SEBI is investigating complaints about irregularities in Vaswani IPO’s share allotment.
·      Reliance Capital Trustee Company, a subsidiary of Reliance Capital has increased its stake in HPCL to 5.02% for over `12.80Cr.
·      Cairn Energy is interested in expanding its operation into east Africa.
·      HPCL will import 12.5 million tonnes of crude oil in FY12, including one million tonnes from the spot market.
·      Coal India plans to pick up a 15% stake in US-based Peabody Energy's $600mn Wilkie Creek mining project in Australia to the coal ministry.

May-19-'11:: India Note - Keynote Capitals

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Views on markets today
·      Indian markets continued to remain in the negative terrain yesterday and closed to their lowest close in nearly two months as sentiments turned bearish on concerns that possible hike in diesel prices would lead to another interest rate hike by the RBI. Selling by foreign funds and rise in crude oil prices along with profit booking in State Bank of India and Reliance Industries was also put pressure on the markets as well. Except IT and FMCG, all sectoral indices closed on negative note with oil & gas, pharma, auto and real estate stocks were major losers. State-run oil refiners Indian Oil, BPCL and HPCL each fell more than 4% as global crude prices rebounded after falling for two sessions. Reliance Industries declines for the third straight session on reports the company may not be able to ramp up natural gas output from its eastern offshore D6 block for the next three years. SBI extended its decline as brokerages including Morgan Stanley, Goldman Sachs and Bank of America-Merrill Lynch cut their target price on the bank after its March-quarter profit plummeted on higher provisions, operating costs and taxes.
·      Market breadth was weak at ~0.58x as investors sold large cap stocks. FIIs sold equities worth `3.79bn while domestic institutions bought equities of `27.46Cr.
·      Asian markets are mixed today. Japanese markets are moderately lower due to below expected Japanese GDP data and appreciation in the yen. The Hang Seng is up led by the commodity shares and positive close in the US markets overnight.
·      We expect a flat but positive biased opening for the Indian markets as the cues from the global markets are favourable barring Japanese markets. However, investors may stay cautious ahead of the weekly inflation data and any rally has to face strong barriers on the upside.
Economic and Corporate Developments
·      India's gems and jewellery exports rose marginally by 4.18% to `14,268Cr during April. Exports of cut and polished diamonds have increased by 5%, while silver jewellery exports rose by around 34% in April.

19/5/11: News Update (click on link to read article) IFCI research,

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Morning News (click on link to read article)
Economic Times

Business Standard
Ø  Fundamentals of Indian mkts remain attractive: Aberdeen

Business Line
Mint
Financial Express

DNA Money
   (Click on link to view article)

19 May, 2011: Equity Buy/Sell (Technical View) IFCI research,

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Equity Buy/Sell (Technical View)
Ø  We give below support levels of a few more scrips :

o   Canara Bk. : Has good support around 578 & then 435 ;
o   Chambal Fert. - supports ~ 75 and  then around 67 ;
o   Reliance Ind. ~ 885 and then 860 ;
o   ONGC ~260 & then 248.
o   DCB is expected to reverse up in the next few sessions. It has strong support around 48.
o   Mahindra Satyam can be bought for the short term above 78/50


Have strict stop losses

IFCI research, Watch Nifty: 19 May 2011

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Watch Nifty
Ø  Nifty continued to be weak. Its near term first support is likely around 5380. There is a good chance of it bouncing up from these levels, even though for a short period.

Ø  Nifty's support for 19/05 are likely around 5380 and 5350.

NSE, Bulk deals, 19-May-2011

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DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price
Remarks
19-May-2011ANKURDRUGSAnkur Drugs And Pharma LiIFCI VENTURE CAPITAL FUND LTDSELL1,77,00042.33-
19-May-2011ANKURDRUGSAnkur Drugs And Pharma LiNEERA SONIBUY1,12,42442.38-
19-May-2011ANKURDRUGSAnkur Drugs And Pharma LiNEERA SONISELL28,50939.62-
19-May-2011ANSALAPIAnsal Properties & Ind LtIPRO FUND LTDSELL26,20,00042.00-
19-May-2011ANSALAPIAnsal Properties & Ind LtMAVI INVESTMENT FUNDBUY26,20,00042.00-
19-May-2011MARGMarg LimitedCROSSEAS CAPITAL SERVICES PVT. LTD.BUY1,65,67999.28-
19-May-2011MARGMarg LimitedCROSSEAS CAPITAL SERVICES PVT. LTD.SELL1,65,67999.34-
19-May-2011NITINFIRENitin Fire Protection IndPREMSHANKER A MEHTABUY5,79,039103.45-
19-May-2011NITINFIRENitin Fire Protection IndPREMSHANKER A MEHTASELL5,79,039102.89-
19-May-2011PARAPRINTParamount Printpack LtdCROSSEAS CAPITAL SERVICES PVT. LTD.BUY1,68,83330.01-
19-May-2011PARAPRINTParamount Printpack LtdCROSSEAS CAPITAL SERVICES PVT. LTD.SELL1,71,27930.36-
19-May-2011SABERORGANSabero Organics GujaratCROSSEAS CAPITAL SERVICES PVT. LTD.BUY1,74,29480.02-
19-May-2011SABERORGANSabero Organics GujaratCROSSEAS CAPITAL SERVICES PVT. LTD.SELL1,74,29480.22-
19-May-2011SHALPAINTSShalimar Paints LtdCPR CAPITAL SERVICES LTD.BUY27,631446.95-
19-May-2011SHALPAINTSShalimar Paints LtdCPR CAPITAL SERVICES LTD.SELL27,631447.14-
19-May-2011SHALPAINTSShalimar Paints LtdCROSSEAS CAPITAL SERVICES PVT. LTD.BUY57,972447.13-
19-May-2011SHALPAINTSShalimar Paints LtdCROSSEAS CAPITAL SERVICES PVT. LTD.SELL58,483445.03-

BSE, Bulk deals, 19/5/2011

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Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
19/5/2011530621Akar ToolsDIPAK RAMANBHAI PATELB2931974.54
19/5/2011531683Ankur Drugs-$IFCI VENTURE CAPITAL FUND LTDS12300042.27
19/5/2011524760Arvind Intl-$GREEN PARK LEASING AND FINANCE P LTD -B5000010.79
19/5/2011506971BB REALTYROOPSHRI FINVEST PVT LTDB8999520.85
19/5/2011506971BB REALTYARIHANT BAIDS9000020.85
19/5/2011524606Beryl DrugsSAURABHKUMAR RASIKLAL GANDHIS3500026.76
19/5/2011531358Choice IntlIRISHMAN STEELS PRIVATE LIMITEDB8250080.06
19/5/2011512361Cupid TradesPARVATIMINERALS PRIVATELTDS504598.00
19/5/2011533309Dalmia Bharat EntJM FINANCIAL VENTURES LIMITEDB1028000175.00