11 November 2011

IRB, Ceat, INTL : 2QFY2012 results review: Angel Broking,

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IRB
For 2QFY2012, IRB Infra reported a strong set of numbers, in-line with our
estimates. The company’s top line witnessed robust growth of 50.1% to `735.9cr
(`490.3cr), marginally ahead of our estimate of `687.0cr. On the EBITDAM front,
margin came at 43.7% (48.2%), slightly lower than our estimate of 45.2%. Interest
cost came in at `141.1cr (`69.3cr), registering a jump of 103.7%/20.2% on a
yoy/qoq basis. At the earnings front as well, IRB Infra reported healthy growth of
22.1% to `147.6cr (`120.9cr) and 11.1% to `110.1cr (`99.1cr) on a yoy basis at
the PBT and PAT levels, respectively, against our estimate of `147.1cr and
`107.3cr for PBT and PAT, respectively.
Our valuation of `193/share for the consolidated business uses NPV/EV/EBITDAbased
valuation for BOT assets and the C&EPC arm, respectively. We factor in
CoE of 14% and a traffic growth rate of 5/6/7% for its BOT assets. We maintain
our view on the stock with a target price of `193.

NSE, Bulk deals, 11-Nov-2011

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DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price
Remarks
11-Nov-2011ACROPETALAcropetal Tech LtdBP FINTRADE PRIVATE LIMITEDBUY2,25,66216.25-
11-Nov-2011ACROPETALAcropetal Tech LtdBP FINTRADE PRIVATE LIMITEDSELL3,15,18716.34-
11-Nov-2011ACROPETALAcropetal Tech LtdINDRAVARUN TRADE IMPEX PVT LTDBUY5,05,81316.28-
11-Nov-2011ACROPETALAcropetal Tech LtdINDRAVARUN TRADE IMPEX PVT LTDSELL5,05,81316.21-
11-Nov-2011GATIGATI LimitedKARVY FINANCIAL SERVICES LIMITEDSELL7,46,91240.46-
11-Nov-2011GITANJALIGitanjali Gems LimitedGRANTHAM A/C GMO EMERGING COUNTRIESBUY4,84,213347.04-
11-Nov-2011INDOTHAIIndo Thai Sec LtdGKN SECURITIESBUY60,63017.47-

Ranbaxy , Satyam, Lupin, Bharat Forge : : 2QFY2012 results review: Angel Broking,

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Ranbaxy – 3QCY2011
For 3QCY2011, Ranbaxy reported net sales of `2,023cr, up 7.7% yoy. Gross
margin decreased by 65bp yoy for the quarter. OPM increased to 5.0% (4.7%)
during the quarter. The company reported loss of `465cr in earnings due to loss
on foreign exchange on foreign currency option derivatives (loss of ~`400cr). The
stock is under review.

BSE, Bulk deals, 11/11/2011

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Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
11/11/2011533330Acropetal TechINDRAVARUN TRADE IMPEX PVT LTDB25302316.10
11/11/2011533330Acropetal TechINDRAVARUN TRADE IMPEX PVT LTDS25302316.22
11/11/2011531560Aroma EnterprisesJAYANTKUMAR & COMPANY PROP :JAYANTKUMAR MANUBHAI PB7500085.00
11/11/2011531560Aroma EnterprisesSHEETALBEN PARASMAL JAINS9790085.00
11/11/2011521174Arora FibresDEEPINDER SINGH POONIANS948329.97
11/11/2011590122ASHIKACRASHIYANA MERCANTILE PRIVATE LIMITEDS3670050.00
11/11/2011590122ASHIKACRS P ADVISORS PVT.LTD.S7336449.99
11/11/2011524606Beryl DrugsKAILASHBEN NATWARLAL SHAHB2741219.47
11/11/2011531695Dhvanil ChemKISHAN TULSHIBHAI BHUVAB4700026.74
11/11/2011531695Dhvanil ChemMALAY ROHITKUMAR BHUWS4091426.58
11/11/2011508860DIAMANTKIRAN BHIKU BHANAESB20500014.59
11/11/2011508860DIAMANTJINAL APURVA RAWALS27500014.67

CESC, Godawari Power, Apollo Tyres: : 2QFY2012 results review: Angel Broking,

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CESC
During 2QFY2012, CESC reported 12.3% yoy growth in its standalone net sales to
`1,241cr. Top-line growth was on account of better realization, as the volume of
power generated during the quarter was flat yoy at 2,355MU. Operating profit
during the quarter decreased by 18.2% yoy to `260cr. OPM for the quarter
declined by 783bp yoy to 21.0% on account of higher other expenses. Other
expenses during the quarter were higher on a yoy basis, at `195cr, on a low base
(CESC reported negative other expenses of `14cr in 2QFY2011). Other expenses
for the quarter included cost adjustments of `67cr as against negative `217cr in
2QFY2011. On the bottom-line front, net profit decreased by 26.5% yoy to
`114cr. We maintain our Buy view on the stock; our target price is under review.

11/11/11: Categories Turnover (Rs. crore) Clients NRI Proprietary Trade Data

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Categories Turnover
(Rs. crore)
ClientsNRIProprietary
Trade DateBuySalesNetBuySalesNetBuySalesNet
11/11/111,713.801,760.93-47.131.130.660.46496.95489.737.22
9/11/111,873.191,762.44110.760.860.420.44503.41543.69-40.28
8/11/111,414.041,446.17-32.130.500.360.14387.51383.094.42
Nov , 1111,259.5911,201.4058.196.345.211.133,217.343,207.509.85
Since 1/1/11424,477.84429,150.29-4,672.44302.99210.8792.11123,517.97122,672.04845.93

11 Nov: Economic and Political News 􀂄 Angel Broking,

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Economic and Political News
􀂄 Domestic car sales dip by 24% yoy in October 2011
􀂄 No automatic route for FDI into existing pharma firms
􀂄 Agriculture sector growth of 4% will check inflation: Planning Commission
Corporate News
􀂄 PFC gets nod to launch US$1bn private equity fund
􀂄 EMC wins `776cr deal from PowerGrid Corp.
ô€‚„ HCC’s arm Lavasa gets environment ministry's nod
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

11/11/11: FII & DII Turnover (BSE + NSE) (Rs. crore)

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FII & DII Turnover (BSE + NSE)
(Rs. crore)
FIIDII
Trade DateBuySalesNetBuySalesNet
11/11/113,049.993,133.25-83.261,045.761,158.94-113.18
9/11/112,280.591,721.55559.04811.921,343.78-531.86
8/11/111,696.021,239.74456.28369.26746.73-377.47
Nov , 1114,551.2113,503.521,047.695,541.537,072.84-1,531.31
Since 1/1/11   *533,950.07550,879.61-16,929.54247,808.37227,294.1720,514.20

Tata Steel, DLF, Hindalco : 2QFY2012 results review: Angel Broking,

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Tata Steel
Tata Steel reported disappointing profitability for 2QFY2012. Consolidated net
sales increased by 14.5% yoy to `32,798cr (above our estimate of `30,936cr)
mainly on account of increased average realizations. Tata Steel India’s net sales
increased by 15.7% yoy to `81,42cr. Tata Steel India operations sales volumes
decreased by 0.7% yoy to 1.65mn tonnes, while Tata Steel Europe (TSE) operations
sales volumes decreased by 1.7% yoy to 3.48mn tonnes in 2QFY2012. Tata Steel
India’s average realization/tonne increased by 18.6% yoy to `46,402, while TSE’s
average realization/tonne decreased by 1.0% yoy to US$1,148 on account of
subdued demand in Europe. EBITDA/tonne decreased by 19.1% and 47.0% yoy to
US$365 and US$30 in Tata Steel India and TSE operations, respectively, as
increased realization (at India operations) was more than offset by higher rawmaterial
costs. Consolidated EBITDA decreased by 25.1% yoy to `2,750cr. Other
income decreased to `120cr compared to `814cr in 2QFY2011. The company
reported exceptional forex loss of `150cr in 2QFY2012. Adjusting for exceptional
items, adjusted net profit decreased by 81.4% yoy to `362cr, significantly below
our estimate of `1,339cr. Consolidated reported net profit stood at `212cr
compared to `1,979cr in 2QFY2011. Standalone net profit decreased by 27.6%
yoy to `1,495cr. Consolidated net debt stood at US$8.4bn as on September 30,
2011. We maintain our Buy rating on the stock; our target price is under review.

Result Reviews State Bank of India:: Angel Broking,

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Result Reviews
State Bank of India
For 2QFY2012, SBI’s standalone net profit increased by 12.4% yoy to `2,810cr,
in-line with our estimates. A strong sequential expansion in both domestic and
foreign NIM was the major positive from the result. However, fresh slippages of
`8,000cr and lower recoveries and upgrades during the quarter led to gross NPAs
shooting up by 22.2% qoq. Gross NPA ratio as of 2QFY2012 stood at 4.2% and
net NPA ratio stood at 2.0%. Provisioning coverage ratio declined considerably by
375bp to 63.5%. The bank made counter-cyclical provisions of `550cr in
2QFY2012 (`1,100 for 1HFY2012) to meet the stipulated 70% provision coverage
to gross NPA ratio as of September 30, 2010. Non-interest income declined by
14.4% yoy on account of lower treasury gains and dividend income (no interim
dividend received from subsidiaries). Fee income also came in lower by 11.7% yoy
mainly on account of bulk upfront fees received from some large corporate deals
last year and lower cross-sell income.
The stock is trading at 1.2x FY2013E ABV (adjusting for value of subsidiaries).
We recommend a Buy rating on the stock with a target price of `2,194.

Results Calendar 11/11/2011 -15/11/2011 :Angel Broking,

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Results Calendar
11/11/2011 Mundra Port, Adani Power, Tata Chemicals, Reliance Capital, Britannia, MOIL, HDIL, Anant Raj, SpiceJet, Dishman Pharma
12/11/2011 Coal India, Nalco, Rcom, IVRCL Infra
13/11/2011 Sun Pharma, LIC Housing Fin.
14/11/2011 BHEL, Tata Motors, Adani Enterp., M&M, Cipla, Jaiprakash Asso., JSW Steel , Unitech, Bhushan Steel, GSPL, Aventis, Areva, BGR
Energy , India Cements, Amara Raja Batteries, Graphite India, Simplex Infra, Patel Engg., Madhucon Proj, JK Tyre
15/11/2011 Tech Mahindra

Market Outlook - 11 Nov, 2011:: Angel Broking,

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Dealer’s Diary
Indian markets are expected to open sideways tracking mixed cues from the
markets worldwide. While the shift in epicenter of euro zone crisis from Greece to
Italy have raised fresh concerns for investors and led to sharp fall in indices
worldwide on Wednesday, news of a successful bond auction in Italy pulling the
yield on Italy's ten-year bond back below 7% and election of former European
Central Bank Vice President Lucas Papademos as Greece's new prime minister
helped the markets relax and close mostly higher on Thursday.
The rebound in US stocks was also aided by better than expected economic data
from the US on Thursday. The jobless claims fell unexpectedly to 390,000 from
the previous week's revised figure of 400,000, while a separate report showed
that the U.S. trade deficit unexpectedly narrowed in September, as the value of
exports increased at a much faster rate than the value of imports.
Meanwhile, Indian investors will keenly watch out for the IIP and the weekly
inflation figures due today, which are expected to give more clarity to the
domestic markets in the coming days.

Derivative Report - 11 NOV 2011 -Angel Broking,

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Comments
 The Nifty futures’ open interest decreased by 1.29% while
Minifty futures’ open interest decreased by 1.29% as
market closed at 5221.05 levels.
 The Nifty Nov. future closed at a Premium of 16.05 point
against a Premium of 26.20 points. The December Series
closed at a Premium of 43 points.
 The Implied Volatility of at the money options is
increased from 21.12% to 21.81%.
 The PCR-OI has decreased from 1.35 points to 1.34
points.
 The total OI of the market is `1, 26,083.80cr. and the
stock futures OI are `32,484.04cr.
 Stocks were cost of carry is positive are JSWISPAT,
KSOILS, TATACOMM, SREINFRA and VIDEOIND.

FII DERIVATIVES STATISTICS FOR 11-Nov-2011

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FII DERIVATIVES STATISTICS FOR 11-Nov-2011 
 BUYSELLOPEN INTEREST AT THE END OF THE DAY 
 No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
INDEX FUTURES630571629.131153672953.0557291214661.78-1323.92
INDEX OPTIONS48382412493.7745807611863.44162215841930.71630.33
STOCK FUTURES715721735.62916972214.83120348429087.99-479.22
STOCK OPTIONS21648513.0721654514.0536413899.37-0.98
      Total-1173.79

 
 

-- 

India Equity Strategy - What if GDP growth trend slows to 7%? ::Deutsche Bank

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What if India’s GDP growth trend slows to 7%?
While we note a trend GDP growth rate of 8-9% has been embedded in investor
expectations of India’s earnings growth/ROE trajectory, policy uncertainties, the
conflicting demands and compulsions of a popular democracy on the government
and India Inc’s growing discouragement, are increasing the risk of India’s -
medium term - GDP trajectory slowing towards 7%. In this note we have
attempted a sensitivity analysis to assess the impact of slowing growth on BSE
Sensex earnings and answer questions associated with a slowing GDP growth
trend. However, a 7% GDP growth trajectory is not our base case scenario with
our economists forecasting a 8% average GDP growth over next two years.
What will be the impact of a slowing growth on India’s valuation multiples?
We confess that India is beginning to lose some of its investor goodwill
accumulated over the past five to seven years. The perception of a slowing GDP
growth trend, could result in a further de-rating of the country’s valuation multiple
and a compression in its average premium to MSCI Asia nudging investors into an
even more cautious posture. Over the past few months we have seen a 260bps
compression in India’s PE valuation, driven by rising risk aversion (due to global
factors) and worries over policy uncertainties. While it is difficult to quantify the
extent of future valuation compression, we would think that valuations could get
reset to a level of 11x to 12x, which prevailed in the late nineties and first half of
previous decade (corresponding fair value range of 14500-16000 for the Sensex).
Moderate 3% downside risk to Sensex FY13 earnings
Our India research team’s extensive bottom up sensitivity analysis suggests a
downside of 3.2% to our current BSE Sensex earnings expectation for FY13,
taking earnings growth for FY13 to 12.5% from our current estimates of 16.3%.
While the downside risk to FY13 earnings sensitivity may appear muted, this could
be attributed to our analysts having already cut FY13 earnings estimates by 12%
since Apr’11 (relative to a 9% cut for FY12).
Highest downside risk to Capital Goods, Autos, Telecom
Capital Goods/Construction companies could witness the sharpest downside
risk (-11%) driven by 13% drop in L&T’s earnings and 11% drop in BHEL’s
earnings. Autos earnings could be impacted by ~7% led by Maruti (12%), M&M
(8%) and TAMO (6%). Telecom earnings could decline by 6%. For Banks, slowing
GDP growth would lead to asset quality concerns, with our Banking analyst
getting more worried on asset quality in the power and SMEs segments.
However, banks could likely restructure their power assets rather than classifying
them as NPLs which may lead to valuation multiple contraction.
What could allay downside concerns?
Bold policy actions on state electricity board reforms (power tariff hikes),
addressing supply side bottlenecks in coal, preventing any runaway increase in
fiscal deficit (through raising fuel and fertilizer prices) and most importantly
assuaging India Inc’s high pessimism, remain critical, in our opinion, to ensuring
that India’s investor goodwill is not impaired. Expectations of slowing global
growth and increasing regulatory focus on commodities may well be a silver lining
for government finances, if commodity (particularly oil) prices continue to ease.

Hold OnMobile Global; Target :Rs 70 ::ICICI Securities

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C a t s   a t   h o m e ,   l i o n s   a w a y …
OnMobile Global reported its consolidated numbers that were better than
our estimates on the topline front. The company reported a topline of |
155.2 crore vs. our expectation of | 140.1 crore, growing 13.8% QoQ and
18.0% YoY. EBITDA for the quarter stood at | 32.5 crore vs. our
expectation of | 26.8 crore growing 20.4% QoQ and 16.5% YoY. EBITDA
margin for the quarter stood at 20.9%, improving by 115 bps YoY. PAT
stood at | 47.4 crore against our expectation of | 11.4 crore due to higher
other income of | 51.1 crore, which  included | 46.6 crore earned by
selling a significant amount of stake sale in Ver Se Innovation Pvt Ltd.
Highlights of the quarter
OnMobile Global’s revenue stood at | 155.2  crore as against our
expectation of | 140.1 crore. The  growth in revenues came from
international operations in both the core and investment business mainly
contributed by Latin American and  African operations. EBITDA margins
improved 115 bps QoQ but declined by 26 bps YoY due to an increase in
content cost and employee cost. The employee cost went up as a result
of salary revisions effective Q2FY12  onwards. The bottomline, however,
benefited by | 46.6 crore earned form a stake sale of ~10% of Ver Se
Innovation Pvt Ltd. The company continues to hold ~ 5% of the Ver Se
which it intends to sell in the near future.
V a l u a t i o n
The company reported a topline that was slightly better than our
expectations due to higher-than-expected growth in international
revenues. The domestic business, however, de-grew, which remains a
concern. At the CMP of | 66, the stock is trading at 9.5x FY12E EPS of |
6.9 and 10.9x FY13E EPS of | 6.0. Using the DCF methodology, assuming
a revenue CAGR of 11.4% over FY11 to FY20 and 3.0% thereon, we have
arrived at the target price of | 70 implying an upside of 7%. Our target
price discounts the FY13E EPS by 11.7x. We maintain our target price but
due to recent run up in the stock, we downgrade it from BUY to HOLD.

Buy McLeod Russel; Target : Rs 305 ::ICICI Securities

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H i g h e r   p r i c e s   d r i v e   p r o f i t a b i l i t y   …
McLeod Russel reported its Q2FY12 results. The topline grew by 12.3%
YoY to | 405.7 crore led by an increase in both sales volume and prices.
During the quarter, the company’s sales volumes were higher by 2.3
million kg (mkg) and realisations by ~| 6/kg. Employee cost in Q2FY12
witnessed a slight moderation and stood at 29.1% of net sales compared
to 29.9% in Q2FY11. In spite of  a dip in employee costs, marginal
increases in power and fuel cost, freight and other manufacturing
expenses  kept  the EBITDA margin at  the  same  level of 58.2%  in Q2FY12.
Hence, higher sales and sustained margins helped the profitability to
increase by 9.8% YoY to | 223.2 crore against | 203.2 crore in Q1FY12.
Æ’ Operational highlights
The company’s total tea production during the quarter was 36.8 mkg
against 32.9 mkg in Q2FY11. Tea sales volume in Q2FY12 stood at 26.2
mkg against 23.9 mkg in the corresponding quarter last year. Realisation
per kg was also higher by | 5.98/kg and stood at | 157.6/kg.
Æ’ Tea production and prices outlook
Tea production in India is expected to be higher this year (FY12) at ~1000
mkg against ~965 mkg in FY11. The increase in production is expected
on the back of increased plantation in North India due to favourable
weather conditions. Hence, a higher production in the country, lower
inventory levels and a strong consumption growth (both domestic and
international) have led tea prices to increase by ~|10/kg during the year.
Further, with the major tea exporting country, Kenya, experiencing a
shortfall (~37 mkg till September, 2011) in production during the year, we
expect higher tea prices to remain sustainable.
V a l u a t i o n
At the CMP, the stock is trading 9x and 8.6x its FY12E and FY13E EPS of |
27.3 and | 28.8, respectively. McLeod being one of the largest tea
producers and exporters of the country and with tea prices trending
higher backed by a strong demand  growth, we expect the growth in
revenues and earnings to remain healthy, going ahead. We have valued
the stock at 11x its FY13E EPS and assigned it a target price of | 305

Century Plyboards (India) Ltd P&L division drives better operational performance BUY ::Emkay,

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Century Plyboards (India) Ltd
P&L division drives better operational performance


BUY

CMP: Rs59                                        Target Price: Rs82

n     EBITDA at Rs595mn, above est led by better profitability of Plywood & Laminates (P& L) division. Net profit at Rs141mn, -66.4%, below est due to MTM forex losses of Rs267mn
n     Robust topline growth (+33.6% yoy) continues driven by P&L revenue growth of 23.7% while cement segment registered +16.5% revenue growth
n     Delay in commissioning of Cement Grinding unit project at Kahalgaon by 3 mnths has led to volume downgrades and revision in earnings for FY12E/13E by -5.4%/-2.9%
n     3X expansion in cement capacity & full scale operations of CFS business to fuel growth in FY13 (44% topline growth).  De-merger remains potential value un-locking trigger-BUY with revised price target of Rs82