12 June 2012

Annual Report Analysis - Ranbaxy Laboratories : Edelweiss, PDF link


Ranbaxy Laboratories (Ranbaxy) reported loss of INR29bn during CY11, primarily due to provision for settlement with US Department of Justice (DoJ) and forex losses on currency options and loans. With depreciation in INR continuing in Q2CY12, forex losses are likely to continue. Cash conversion cycle improved purely on the back of high creditor days of 224 in CY11 (CY10: 174), but looks unsustainable.

IIP - Industry stalls; monetary easing on the cards : Edelweiss, PDF link



Industrial activity barely grew (0.1% YoY) in April, against our expectation of 2.5%, largely reflecting a sharp contraction in capital goods. With this data, it is clear that uptick in activity seen during Nov2011-Feb2012 has not sustained. Investment slump is apparently leading the weakness in IIP, but consumer goods production is also gradually slowing on trend basis. More importantly, the forward looking intermediate goods also remain in contraction zone, foreshadowing continued weakness in overall industrial activity. Likely monetary easing by RBI in coming months could revive some business confidence. However, rate cuts have to be accompanied by government policy action, to bring about a turnaround in the investment cycle. 
Regards,


Natco Pharma: Risk-reward remains favourable 􀂄 JM Financial


Risk-reward remains favourable
􀂄 Strong operating performance in FY12: Natco posted 15% sales growth for
FY12 at `5.2bn. During FY11, the company had divested one retail pharmacy
store in US (sales of $10mn). Excl the US retail sales, underlying sales were
stronger at 27%. EBITDA at `763mn was up 25% YoY while margins at 14.7%
were higher 120bps YoY. The margin increase was driven by better product
mix (lower US retail). Adjusted net profit at `596mn was up 2.8% YoY
primarily due to higher taxes (at 26.1%). Domestic oncology sales at `1.5bn
grew by 22% YoY driven by both volume and price increase.



DLF - Land sale a step in right direction : Edelweiss, PDF link

Edelweiss Technical Reflection (ETR) 12 June



Edelweiss Technical Reflection (ETR)
Indian markets ended marginally lower on the back of strong profit taking at 5100 levels. Bullish cues from the Asian indices helped Nifty open with a gap up and print an intraday high of 5122 and consolidate in a tight range for the better part of the day. The final couple of hours saw the index crack down significantly driven by threats of an investment ratings downgrade by S&P that resulted in a break of the 21-hourly EMA support of 5049. Hourly momentum oscillators have rolled bearish, whereas immediate near-term oscillators are in overbought state calling for a correction in prices. Volumes were average in yesterday’s session and the breadth ended marginally in favour of advances. India VIX jumped to 25.02 levels, taking support at its 50-DEMA. Nifty has now retraced a little more than its 38.2% of the fall from 5630 to 4770 and is positioned to do 50% once a minor pullback is completed 4990 / 4950. Only a close below 4950 would signal a bearish reversal in the current set-up.

At the close of day, barring the IT index (+0.19%), all other indices slipped in the red led by Cap Goods (-1.64%), Healthcare (-1.34%) and Realty (-1.02%). The broader market indices on the other hand were mixed as the Mid-cap index lost 0.20% and the Small-cap index gained 0.21%.

Bullish Setups: CNXBANK, REC, HUVR, BPCL
Bearish Setups: DRRD, LICHF, INFO, HDFC, ACEM

Regards,
Edelweiss Research


Stocks in News : 12 June: Edelweiss


 Stocks in News
S&P hurls a BRIC, warns India may lose its rating (ET)
DLF sells hotel arm to Kolkata consortium for INR 5.67bn (ET)
Suzlon gets more time to repay $ 360-million FCCB (ET)
DoT plans uniform licence fee from July (ET)
RCOM moves Delhi court, seeks more spectrum ahead auction (ET)
EGoM may not cut reserve price; Panel has added a new clause stating that the objective of sale will be to maximize revenue proceeds  (ET)
Srei Infra’s Russian JV to sell stake (DNA)



BSE, Bulk deals, 12/6/2012


Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
12/6/2012530027Aadi IndsRUSHABH SHAHB761589.32
12/6/2012532664Amar RemediesNIPPON INVESTMENT AND FINANCE COMPANY PRIVATE LIMITEDB140000143.00
12/6/2012521131Anjani Dham IndsPATEL KAPILABEN SOMABHAIB6000210.00
12/6/2012509026Artheon FinASHISH SANTOSHKUMAR GANERIWALS2685061.28
12/6/2012531795Atul Auto-$NAVODYA ENTERPRISESB41608165.60
12/6/2012511672Clarus FinanceGLOBAL INFRATECH & FINANCE LIMITEDB16069422.75
12/6/2012511672Clarus FinanceGRD FINANCE PRIVATE LIMITEDB15000022.84
12/6/2012533272Commercial EngineersINDIA MAX INVESTMENT FUND LIMITEDS35352572.03
12/6/2012511710Cubical FinRAJENDRA KUMAR GARGB8800021.93
12/6/2012531820Finalysis CredDHARMENDRA HARILAL BHOJAKB2950063.20
12/6/2012531820Finalysis CredSANJAY ATMARAM AGARWALS3400063.20
12/6/2012531479Global Land MastersMUKESH VEER GUPTAS462009.22
12/6/2012519560Neha IntlCLARUS FINANCE AND SECURITIES LIMITEDB26000029.50
12/6/2012519560Neha IntlLILYGOLD MERCHANTS PRIVATE LIMITEDS14752229.50
12/6/2012534190Olympic CardsSANJAY PRAVINBHAI SHAHB10000033.75
12/6/2012505525Parichay InvestBINAL J MODIS6170161.92
12/6/2012505525Parichay InvestSANJEEV BURMAN JHAVERIS6000162.79
12/6/2012505525Parichay InvestJHAVERI SANJEEV BURMANS8653162.89
12/6/2012524540Secunderabad HealthNASEEN TRADELINK PRIVATE LIMITEDS28738711.54
12/6/2012511754Shalibhadra FinJIGNESHKUMAR HARSHVADAN GANDHIB2897458.14
12/6/2012590093TRIMURTHI DREAST WEST TRADELINK PVT LTDB3632118.86
12/6/2012590093TRIMURTHI DRHARDIK RASHMIKANT PANCHALS3820618.76
12/6/2012532311Tutis Tech-$SANTOSH MAHADEO JADHAVS9500011.62
* B - Buy, S - Sell
** = Weighted Average Trade Price / Trade Price



NSE, Bulk deals, 12-Jun-2012



DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price
Remarks
12-Jun-2012AMARAmar Remedies LimitedNIPPON INVESTMENT & FINANCE CO PVT LTDBUY1,40,000143.00-
12-Jun-2012ARSSINFRAARSS Infra Proj. LtdIFCI LTD.SELL1,09,24252.62-
12-Jun-2012HDILHousing Development and IGENUINE STOCK BROKERS PVT LTDBUY26,76,92974.59-
12-Jun-2012HDILHousing Development and IGENUINE STOCK BROKERS PVT LTDSELL26,76,92974.61-
12-Jun-2012HOTELRUGBYHotel Rugby Ltd.RAJNIKANT BABULAL SHAHSELL94,49919.00-


Vivek Patil Weekly Technical Analysis: Week of 11th June 2012 -ICICI Sec PDF link




  • Sensex bounces 5% from the 80% retracement level to Dec-Feb rally.
  • India Inc's revenue growth slowest in over 2 years.
  • US job growth less than most pessimistic forecast.
  • Crisil lowers FY13 GDP growth forecast to 6.5%.
  • Monsoon arrives in India.
  • Services PMI rises to 3-month high.
  • Market awaits RBI policy to be announced of 18th Jun, expects rate cut.
  • PM promises big push to core projects to move towards 9% growth.
  • After 4 years, China cuts interest rate to fight slowdown.


  • FII & DII trading activity across NSE and BSE 12-06-2012


    CategoryBuySellNet
    ValueValueValue
    FII1423.321479.92
    -56.6
    DII868.66922.87
    -54.21

     


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    FII DERIVATIVES STATISTICS FOR 12-Jun-2012


    FII DERIVATIVES STATISTICS FOR 12-Jun-2012 
     BUYSELLOPEN INTEREST AT THE END OF THE DAY 
     No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
    INDEX FUTURES650001627.60649071631.103707709338.57-3.50
    INDEX OPTIONS77149819276.6274854518703.52161316941256.99573.10
    STOCK FUTURES429921039.23528411289.1593342022898.81-249.92
    STOCK OPTIONS483871274.30486351283.23480551245.67-8.93
          Total310.75

     

    -- 



    ICICI Bank - Annual report: Read across PSL, retail profit, restructuring; company update; Buy : Edelweiss, PDF link



    ICICI Bank (ICICIBC IN, INR 827, Buy)
    Our analysis of ICICI Bank’s (ICICI) FY12 annual report throws up following interesting insights with respect to increased PSL requirement, retail segment profitability, higher dividend income triggers, outstanding restructured pool disclosure etc. We maintain 17% CAGR in earnings over FY12-14E, expecting core ROA/RoE to come in at 1.7%/15%. The stock trades at attractive valuations of 1.3x FY13E core book. Maintain ‘BUY’.


    Wipro - Delayed decision making impacting growth; company update; Hold : Edelweiss, PDF link



    Wipro (WPRO IN, INR 400, Hold)
    We recently attended analyst meet of Wipro where the company’s CEO, Mr. T.K. Kurien, and vertical heads of BFSI and healthcare verticals made presentations highlighting emerging trends, challenges and the company’s response to address growth potential. From the meet, we infer that BFSI continues to remain challenging, while rest of the verticals continue to face delays related to decision making. At a P/E of 13.6x FY14E, we maintain ‘HOLD’


    IndusInd Bank - Unleashing second leg of growth; initiating coverage; Buy : Edelweiss, PDF link



    IndusInd Bank (IIB IN, INR 328, Buy)
    Having successfully completed Phase I of its growth strategy, the management team at Indusind Bank (IIB), led by Mr. Romesh Sobti, is ready with the Phase II line up. Driven by a network expansion-led CASA improvement and newer avenues of fee income, we expect the bank to deliver 25% CAGR in earnings (one of the highest in our universe) supported by best-in-class return ratios. We initiate coverage with BUY with TP of INR380 (valuing at 3.2x FY13E book-15% discount to HDFC Bank).


    Prime Focus - Q4FY12 - Result update - Centrum



    Prime Focus

    Buy
    Target Price: Rs95
    CMP: Rs48         
    Upside: 100%
    Value unlocking on cards
    Strong revenue growth on the back of 2D-3D conversion helped the company post 53% YoY growth in revenues in FY12. Healthy operating margins at 30.3% following an increase in global sourcing boosted PAT by 22% during the year. We believe the strong order book in 3D conversion and high growth opportunity from PFT will drive revenues and margins going forward. With an opportunity to unlock value in its subsidiary, we expect the stock to re-rate from current levels. Maintain BUY 

    eClerx Services - Near-term pain, long-term gain; visit note; Buy : Edelweiss, PDF link


    We recently met the eClerx Services (eClerx) management for a business update and outlook going forward. While it stated that growth in H1FY13 could moderate due to delays in decision making, discussions with clients over longer time horizon indicate momentum will continue and growth is will pick up in H2FY13. We continue to prefer eClerx for its cost focused business model and expect it to post revenue CAGR of 20% over FY12-14E along with high ROE (over 40%) and a dividend payout of 50%. At P/E of 8.6x FY14E. Maintain BUY.   

    Why reading your insurance policy is important ::Business Line



    If you disagree with any of the terms and conditions of your policy, you can return it within 15 days of receipt, stating the reasons for disagreement.
    The first thing a life policyholder should do when the policy bond reaches him is to read the policy fully. All insurers advise the customer to read the policy and check the details therein and, should he find a mistake or error in it, to get it corrected immediately. A small lapse at this stage can create problems later.
    Let us take the case of a policyholder who paid premiums through salary deductions. He called on the insurer to get his name corrected on the maturity claim cheque. He had hardly ever taken out his policy bond from its envelope in twenty five years, and had not noticed the error even while submitting it to the insurer along with the maturity claim papers.


    Opportunities round the corner for India Inc ::Business Line



    India is on a sticky wicket. Challenges in the form of fiscal deficit, trade deficit, weakening rupee, balance of payment, hard interest rates, inflation and subsidies and so on, are threatening to derail the economy.
    Each passing day is also showing more evidence of potential sovereign debt crisis in Europe and US is still to recover fully from the economic downturn post sub-prime crisis of 2008. What does this imply for Indian firms? Can we expect any positive impact of the crisis on our economy?


    Sales Traders Commentary : 12 June: Edelweiss


    Sales Traders Commentary
    On Monday, the domestic equity market settled flat with negative bias following sudden news of possibility of downgrade in India’s investment grade rating by S&P. Both Sensex and Nifty dipped 0.30% each. Selling was seen in capital goods, healthcare, realty, oil&gas and financial stocks.
    While the Sensex closed at 16668, down 51 points, the Nifty slipped 15 points to end the day at 5054.
    Major gainers were Tata Power Company (2.18%), Bajaj Auto (1.85%), Hindustan Unilever (1.58%), G A I L (India) (1.55%), Coal India (1.44%), and Sterlite Industries (India) (0.84%).
    Major losers were Cipla (2.25%), Bharat Heavy Electricals (2.21%), Larsen & Toubro (1.99%), Jindal Steel & Power (1.93%), Tata Motors (1.40%), and Hero Motocorp (1.36%).
    The Consumer Durables index jumped 0.99%. Major gainers were Titan Industries (0.99%), T T K Prestige (0.68%), Whirlpool Of India (0.44%), Rajesh Exports (0.39%) and Blue Star (0.18%).
    The Capital Goods index slipped 1.64%. Major losers were BEML (2.52%), A I A Engineering (1.88%), Bharat Electronics (1.67%), Alstom Projects India (1.52%) and A B B (0.47%).
    The HC index was down 1.34%. Major losers were Cipla (2.25%), Divis Laboratories (1.87%), Apollo Hospitals Enterprise (0.95%), Cadila Healthcare (0.86%) and Biocon (0.37%).
    The Realty index was down 1.02%. Major losers were Prestige Estates Projects (5.77%), D B Realty (4.24%), Indiabulls Real Estate (2.84%), D L F (1.58%) and Godrej Properties (0.61%).
    Major losers in the mid–cap space were A I A Engineering (1.88%), Alstom Projects India (1.52%), Aban Offshore (1.25%), A B G Shipyard (0.96%) and CORE Education and Technologies (0.73%).
    Major gainers among small caps were Adhunik Metaliks (1.46%), Reliance MediaWorks (1.01%), Aanjaneya Lifecare (0.94%), Action Construction Equipment (0.52%) and A2Z Maintenance & Engineering Services (0.19%).
    Globally, Asian indices ended on a higher note while European indices were trading in the green



    Macro & Markets - Risk-off continues : Edelweiss, PDF link


    May witnessed risk-off trade globally, with equities, commodities, EM currencies, all falling sharply and bond yields in US and Germany hitting record lows. Synchronized downturn in global economy and escalation of European debt crisis were the key factors shaping the market performance. In India, equities slipped ~6%, led by lackluster portfolio flows. Meanwhile, earnings season was not so inspiring. While earnings growth was ahead of expectations, it was largely on the back of a few stocks. Further, revenue growth is slowing and more importantly, the downgrade cycle seems to be gaining pace, after a brief lull.

    Oracle Financial Services: Hold ::Business Line




    Investment Focus: Cairn India - Buy :Business Line


    Investors with a long-term perspective can consider buying the shares of oil exploration and production major Cairn India. Attractive valuations and good prospects for stepping up production support the recommendation. The stock of Cairn India has taken a beating in recent weeks, following the dip in the price of crude oil. Global economic nervousness has led to a fall in Brent crude price from nearly $120 a barrel at the end of April to around $100 now. Cairn India's output is priced at about 15 per cent discount to Brent. While the decline in the dollar price of its output negatively impacts Cairn, it is hedged to a good extent by the near 12 per cent strengthening of the dollar against the rupee since February. This should cushion the company's financials.

    Why your property may get pricier ::Business Line



    In the sales agreement, companies are adding an escalation clause to offset increasing costs and protect margins.
    If you have booked a flat and are still awaiting its possession, watch out for the cost-escalation clause in the property agreement.
    Real estate companies are tweaking business strategies to build in the clause, besides working on faster project execution and timely deliveries as a measure to improve margins.
    As the fourth quarter of the current fiscal was a mixed tiding with both the top lines and the bottom lines of most listed realtors nosediving in the wake of high borrowing costs and low demand, companies say such a clause will help them bite the cost bullet.


    PDF link : S&P report: Will #India Be The First BRIC Fallen Angel?



    Will India Be The First BRIC Fallen Angel? 


    Read S&P's report here:

    BPCL - Upside case of 1.0bn boe : Edelweiss, PDF link


    Bharat Petroleum (BPCL) announced another gas discovery in the Atum well in Offshore Mozambique block, taking its total tally of gross recoverable reserves from the block to 30-60 tcf; the company’s share in the same is 3.0-6.0 tcf (500mn-1.0bn barrels of oil equivalent). The Atum discovery well encountered more than 300 net feet (92 meters) of natural gas pay in two high-quality Oligocene fan systems and was found to be an extension of the Golfinho discovery. The Atum-Golfinho complex on its own is expected to hold 10-30 tcf of recoverable reserves. With more exploration drilling planned for the year (Orca, Black-Pearl) along with multiple drill-stem appraisal wells, we see upside risk to our base case numbers for the Mozambique block. We maintain our bullish stance on BPCL’s E&P assets and retain ‘BUY’ with TP of INR843/share. BPCL remains our favourite among the three OMCs.

    12 June: Business News Tablet (click on link to read article) : IFCI Financial Services Limited



    Business News Tablet (click on link to read article)

    Economic Times

    Business Standard

     Business Line
    Mint

    Financial Express

    Financial Chronicle

       (Click on link to view article)
    Thanks and Regards
    IFIN: IFCI Financial Services Limited