ArcelorMittal downgraded CY12 global steel demand growth estimate 50bps in its Q2CY12 commentary, but believes that global economic activity has bottomed out and should improve going forward. The company also expects restocking in Europe in Q4CY12 leading to increase in steel prices. Chinese steel demand is expected to grow ~5% YoY in CY12E and the company does not perceive a threat of Chinese dumping. ArcelorMittal’s European business posted strong sequential improvement in EBITDA margin inspite of ~7% QoQ decline in shipments. In comparison, we are assuming more conservative numbers for Tata Steel Europe (TSE).
26 July 2012
"Global Pulse" : ArcelorMittal; Bottom in sight: Edelweiss, PDF link
ArcelorMittal downgraded CY12 global steel demand growth estimate 50bps in its Q2CY12 commentary, but believes that global economic activity has bottomed out and should improve going forward. The company also expects restocking in Europe in Q4CY12 leading to increase in steel prices. Chinese steel demand is expected to grow ~5% YoY in CY12E and the company does not perceive a threat of Chinese dumping. ArcelorMittal’s European business posted strong sequential improvement in EBITDA margin inspite of ~7% QoQ decline in shipments. In comparison, we are assuming more conservative numbers for Tata Steel Europe (TSE).
Pharmaceuticals - Changing landscape in US healthcare supply chain; Edelweiss, PDF link
The US healthcare supply chain industry continues to consolidate aggressively to take advantage of an impending cycle of branded drug patent losses and to gain critical mass. The healthcare supply chain includes pharmacy benefit managers (PBMs), drug distributors, hospitals and retail pharmacies. PBMs and pharmacy chains have been notably active as drugs worth USD60bn will be going off-patent over the next four years and generic utilisation is likely to surge to 80% in CY12 from the current 76%. Though consolidation in the supply chain industry will put pressure on generic manufacturers in the near term because of vendor consolidation and increased pressure from third party payers (PBMs), increase in generic penetration will drive growth over the long term.
IPCA Labs USFDA approval for Indore SEZ aids visibility; Raise PO �� BofA Merrill Lynch,
IPCA Labs
USFDA approval for Indore SEZ
aids visibility; Raise PO
�� Raise PO on improved visibility; Reiterate Buy
The much-awaited approval of IPCA’s Indore SEZ facility by USFDA opens up
growth opportunities for IPCA. While we had factored this for 2HFY13, an earlier
approval improves sales visibility for the US business, facing supply constraints
currently. We raise our sales forecasts by ~3%, mainly on higher US sales,
leading to an EPS estimate increase of 2-3%. Accordingly, we raise our PO to
Rs450, to factor (a) the higher EPS estimates and (b) a likely re-rating to 15x
FY13E P/E (vs. 14x) on higher visibility.
Polaris Financial Technology : Nirmal Bang
Q1FY13 results above street expectations and broad based. Company disclosed more transparent results.
Dollar revenues grew by 3.9% QoQ to $ 107.6 mn. Constant currency revenues stood at $109.31 mn (a growth of 5.6% QoQ). Service revenues grew by 3% and Product revenues grew by 6.4% on q-o-q basis.
In Rupee terms, revenues grew 9.4% QoQ to 569.3 crore partly due to rupee depreciation. Gross margins grew 118 bps QoQ to 37.13%. EBIDTA margins growth remain subdued despite no wage hikes during the quarter. They grew 139 bps QoQ to 18.4%. R&D spent stood at Rs.28.8 crore which is almost 5.1% to revenues. The company is making investments in the core banking, treasury management and insurance. Other income stood at Rs. 13.64 crore (out of which Rs.9 crore was due to sale of assets). In Q4FY12, other income stood at Rs.21.6 crore (out of which Rs.15 crore was due to sale of assets). PAT was flat QoQ at Rs. 61.2 crore and was above our expectation primarily due to higher extraordinary income and lower tax rate in Q4FY12.
Inform funds of new residential status :: Business Line
I am a non-resident Indian investing Rs 30,000 a month in mutual funds in India. I have SIPs in the following funds: Rs 5,000 each every month in HDFC Top 200 Fund, DSP BlackRock Top100 Fund, SBI Emerging Businesses and UTI MNC Fund, all under growth options.
I also have some investments in DSPBR Balanced (Rs 1.25 lakh) but would like to close this and start SIPs in HDFC Balanced at Rs 5,000 a month.
I have parked Rs 50,000 in Reliance Gold Savings Fund and would like to invest more. But I cannot invest in these SIPs after December 2013 as I will settle down in India after that. But I can keep the funds locked for three to five years. I am also planning to hold Rs 15,000-20,000 in bank deposits — one half in a recurring deposit and the other as contingency fund. Please review my investments. — Jim Paul
Derivatives Info Kit [For July 26, 2012] Sharekhan PDF link
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IT: Is offshoring passé? :: Ambit
Is offshoring passé?
FY12 has been tough for Indian IT offshoring names as industry
growth expectations for the Indian firms are now converging to
that of larger global peers. The industry that was born as a
disruptive innovation in the 1980s and grew inexorably in the
early 1990s seems to be struggling to innovate as it matures. Do
recent trends spell an early demise? We think not. Recent
changes point more to the evolution of a new generation of
offshore outsourcing and hence new a set of winners.
How much to save for retirement? :: Business Line
We received several questions from readers based on our discussion last week on how you can use simple rules to design your asset-allocation strategy. Most of these questions alluded to a very important issue: how much to save for retirement? This question is, indeed, critical to building your retirement fund. In this article, we discuss a simple process you can adopt to save for your retirement fund. It is important to note that our suggestion is not a substitute for the sophisticated models used by investment advisers, should you choose to hire one.
Simple does it.
Asian Paints, --Weak quarter – downgrade from HOLD to SELL :::Religare research,
Weak quarter – downgrade from HOLD to SELL
APNT clocked below-estimated net sales/EBITDA/adj. PAT growth of 12.5%/12.7%9.4% for Q1FY13, impacted by weak sales in the Decorative and Industrial businesses with decorative business volumes likely to have fallen by ~3%. We pare our FY13/FY14 earnings by ~5% and downgrade APNT to SELL from HOLD with a Mar’13 TP of Rs 3,250 given (a) weak volume growth in the domestic business, (b) commodity inflation with impact from Re depreciation and, (c) expensive valuations (31x/26x FY13/FY14 PE).
FDs score over recurring deposits :: Business Line
Fixed deposits benefit more from the power of compounding.
Interest rates may moderate soon. So, it’s a good idea to lock into the current high rates being offered by bank deposits. But which deposit scheme should you go for — fixed or recurring?
When interest rates on both are the same, fixed deposits score over recurring deposits. And when a fixed deposit offers higher rates, it wins hands down — thanks to both better returns and better compounding effect. Here’s why.
Edelweiss Technical Reflection (ETR) - July 26, 2012-EDEL
Indian markets slipped lower in yesterday’s session to close a shade above 5100 before the crucial July series derivatives settlement, but have managed to hold the cluster of 50 and 200 day SMAs. Despite a marginally positive session the day before, Nifty slipped below the 5100 mark intraday in the first half threatening to dive lower; however it managed to recover in the second half on positive divergence developing on the hourly momentum oscillators. Volumes continue to be tepid ahead of the F&O settlement day; and the breadth ended strongly in favour of declines with an A/D ratio of 1:2. Technically, Nifty is taking support at the falling trend channel’s lower end, as well as the cluster of key MAs. Momentum oscillators are on the verge of completing a corrective cycle suggesting a pullback rally should ensue. Volatility, measured by the India VIX subsided down to 16.75 indicating a low-risk environment. We continue to maintain our immediate short-term view of a pullback rally towards the 5200 mark, risking the 5100 / 5094 area on a closing basis.
Most of the sectoral indices ended the day in the red with the exception of FMCG (+0.41%), IT (+0.28%) and Healthcare (+0.04%). Among the top losers were shares from Metals (-2.03%), Power (-1.41%) and Cap Goods (-0.91%) indices. Broader market Mid-cap and Small-cap index indicies fell by -0.76% and -0.79% respectively, underperforming the frontline benchmark.
Bullish Setups: Z, BHARTI, INFY, RIL
Bearish Setups: CNXBANK, ACEM, SBIN, TATA, JSP, BPCL
<>
Regards,
Edelweiss Research
eClerx's Q1FY13 result was in-line with our expectations::SPA
eClerx's Q1FY13 result was in-line with our expectations. The company reported revenues of $28.1mn
(SPAe: 28.4mn) of which $2.3mn (90% of the incremental) contribution came from Agilyst. Organically revenue
grew 1% sequentially to $25.8mn and EBITDA Margins expanded by 40bps on the back of INR depreciation to
38.6%. The company also added 8 new clients. Thus, on the back of strong growth and higher than industry
margin profile, we continue to recommend BUY with a 2-year target price of INR 874.0.
Stocks in News - July 26, 2012-EDEL
Stocks in News
Essar takes ONGC to court for keeping it out of $2bn tenders (ET)
Lupin aims to launch generic version of GSK’s DPI; co to file application for GSK’s $8bn dry powder inhaler advair (ET)
SBI to raise $1bn via bond issue (ET)
Infy’s US Visa row case to go to court as mediation fails (ET)
Unitech opposes Telenor’s rights issue proposal (BS)
Teva to enter India through JV with P&G (BS)
Godrej Consumer looking at Israeli insecticide co (DNA)
Suzlon raises $281mn in short term loans to repay holders of its foreign convertible bonds (DNA)
Sales Traders Commentary - July 26, 2012-EDEL
The Indian equity market settled lower on Wednesday amid weak global cues. Both Sensex and Nifty dipped marginally, down 0.40% each. Metal, consumer durables, power and auto stocks led the decline.
While the Sensex closed at 16846, down 72 points, the Nifty slipped 19 points to end the day at 5109.
Major gainers were I T C (1.70%), G A I L (India) (0.53%), H D F C Bank (0.29%), Tata Consultancy Services (0.17%), Cipla (0.11%) and Housing Development Finance Corporation (0.08%).
Major losers were Jindal Steel & Power (4.10%), Bharti Airtel (2.61%), Hindustan Unilever (2.43%), Tata Steel (2.41%), Hindalco Industries (2.22%) and Wipro (2.01%).
The FMCG index jumped 0.41%. Major gainers were United Breweries (8.44%), I T C (1.7%) and United Spirits (0.32%).
The Metal index was down 2.03%. Major losers were Jindal Steel & Power (4.1%), Hindalco Industries (2.22%), Coal India (1.43%), Hindustan Zinc (0.43%) and Bhushan Steel (0.11%).
The Consumer Durables index slipped 1.7%. Major losers were Titan Industries (3.05%), T T K Prestige (0.99%), Rajesh Exports (0.68%), Videocon Industries (0.59%) and C.Mahendra Exports (0.05%).
The Power index was down 1.41%. Major losers were Reliance Infrastructure (3.27%), Crompton Greaves (3%), G M R Infrastructure (2.29%), Adani Power (1.33%) and Bharat Heavy Electricals (0.44%).
Major losers in the mid–cap space were Aban Offshore (2.8%), CORE Education and Technologies (1.87%), A I A Engineering (1.8%), Alstom India (1.2%) and Alok Industries (0.59%).
Major losers among small caps were A2Z Maintenance & Engineering Services (3.43%), A B G Infralogistics (1.99%), Action Construction Equipment (1.59%), Aanjaneya Lifecare (1.47%) and Aarti Industries (1.35%).
Globally, Asian indices ended on a lower note while European indices were trading positive
Torrent Pharmaceuticals- Performance In Line; Recovery In Margins A Positive ::Nirmal bang,
Performance In Line; Recovery In Margins A Positive
Torrent Pharmaceuticals’ (TPL) 1QFY13 earnings were in line with our as well as consensus estimates and reinforces our confidence on the stock’s re-rating as two of its most important drivers – recovery in domestic business (highest growth in the past six quarters) and improvement in margins – stand validated. We continue to differ from consensus estimates and believe TPL’s base business margins would improve over the next two years on improving profitability of its US business (which turned profitable in 1QFY13), higher capacity utilisation at its Sikkim facility and greater revenue contribution from India and Brazil (two of its most profitable markets). The stock’s valuation at 12x FY14E EPS of Rs51 is still at a steep discount to peers/historical average and does not fully capture the company’s robust growth profile and strong balance sheet as well as return ratios. We retain our FY13E/FY14E estimates, but following the recent surge in the stock, we downgrade our rating to Hold from Buy.
Shriram Transport Finance Corporation Ltd. NCD
Rated: CRISIL AA & CARE AA+
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Ranbaxy- Leveraging Impending Opportunities: Karvy
Leveraging Impending Opportunities
Ranbaxy Laboratories, is positive on impending opportunities like CIPIsotretinoin,
Atorvastatin and others. Derivatives as an overhang will decline
15 % by Apr’13, Ranbaxy will be able to leverage rest of the revenues at
better realizations. We upgrade our rating on the stock to “BUY”..
CIP‐Isotretinoin: This branded prescription product is likely to be launched
in Q4CY12 and scale up will happen only in CY13. We believe the product
had revenues of US$60‐70 mn before the product was withdrawn. We
upgrade our revenues from the same to US$15 mn (vs. US$10 mn) in CY12E
and to US$75 mn (vs. US$60 mn) in CY13E.
26 July: Morning News (click on link to read article) IFCI Financial Services Limited
Morning News (click on link to read article)
Economic Times
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Thanks and Regards
IFIN: IFCI Financial Services Limited
SGX Nifty 5,110.00 +0.50 (Singapore exchange) Indian Markets to open DOWN today
SGX Nifty 5,110.00 +0.50 (Singapore exchange)
8:25 AM India time
July 26, 2012
Indian Markets to open DOWN today
Determining option prices — Part 2 :: Business Line
We covered three factors that determine option premium in our last column.
These were moneyness (whether the position is in profit or not), type of option (European or American) and time to expire. Other factors that affect the premium are:
Volatility: Volatility of an underlying reflects uncertainty about future price movement. Contract with volatile underlying tend to record large gains or losses.
The difficulty of predicting the behaviour of a volatile stock results in the contract commanding higher price for the option.
The option writer also demands higher premium since such contracts deviate widely from the strike price.
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