Auto Sector Update - Earnings preview: September 2012 quarter :: BRICS Research

Auto
September 2012 quarter earnings preview


We expect auto companies under our coverage to report a growth of 8% yoy in
revenue  (down  7%  qoq,  mainly  due  to weak demand) and a flat growth in
earnings  (down 10% qoq). The sector is witnessing demand pressures, though
earnings  will  be  supported  by  four-wheelers  (up  6% yoy). Margins are
estimated  to decline marginally by 8bps yoy and 35bps qoq to 12.4%, mainly
due to a drop in volumes.

Indraprastha Gas - Growth trajectory still intact; visit note; Buy:: Edelweiss

Indraprastha Gas (IGL IN, INR 260, Buy)

We recently met the management of Indraprastha Gas (IGL). Post our interaction, we are enthused about IGL’s growth story, driven by: a) volume growth through DIMTS, blue-line buses and new auto rickshaw licenses and b) margins (lower LNG spot prices and strengthening INR). Thus, we are increasing our FY13E/14E EPS to INR23.0/25.0 from INR18.9/20.5 earlier to incorporate higher contribution margins. We maintain ‘BUY’ with a revised target price of INR320/share (INR311).

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PVR - The metamorphosis: From screen play to lifestyle; visit note; Buy :: Edelweiss PDF link

PVR (PVRL IN, INR 203, Buy)

We recently met Mr. Nitin Sood, CFO, PVR. Mr. Sood believes that changing consumer patterns led by higher propensity to spend on movies has driven double digit growth in the company’s existing screens. PVR plans to add ~160 screens (current base of 197 screens) in the next two years and has already signed up with developers to add 300 screens in the next four years. It has inked an agreement wherein L Capital will invest ~INR1.1bn in the former’s exhibition and entertainment business. We expect the PVR stock to re-rate due to increased focus on being a lifestyle company and rising consolidation in the multiplex industry. Maintain ‘BUY’.

FMCG Sector Update - Earnings preview: September 2012 quarter:: Brics

FMCG
September 2012 quarter earnings preview


Expect  16% revenue growth in Q2: We expect the growth of FMCG companies in
our  coverage  universe  to  be  driven  by  volumes and price in Q2. BRICS
consumer  universe  would record 16% yoy growth to Rs.138.8bn in Q2. Marico
and  GCPL  will benefit from acquisitions, while volumes will drive revenue
growth  for most companies. Recent price hike (9-10%) will accelerate APL’s
performance.

Retail investors have turned over a new leaf ::Business Line

Oil and Gas - Fuel under-recovery: Turning into a virtuous cycle?; sector update:: Edelweiss Research

With the INR’s recent appreciation and marginal fall in crude prices, we anticipate a reduction in fuel under-recovery run rate to INR1.3tn. Prior to recent measures initiated by the government—hike in diesel prices and cap on LPG cylinders—the under-recovery run rate was INR1.9tn due to weak INR, high crude prices and high diesel cracks. This sharp reduction in under-recovery could turn into a virtuous cycle as a result of lower fiscal burden leading to further INR appreciation and a further fall in under-recoveries to as low as INR814bn (crude at USD100/bbl and USD-INR at 50). While this fall in under-recoveries benefits all OMCs via better cash flows and lower interest expenses, BPCL remains our top pick, given its ongoing drilling programme in Brazil/Mozambique, which should lend greater clarity to oil reserves.

Stocks in News - October 9, 2012-EDEL

Stocks in News

EGoM call on spectrum fee may cost telcos INR 270bn (ET)
Essar first to get nod for $ refinancing; Group’s oil & steel arms allowed to borrow overseas for repaying costly rupee loans at home (ET)
Oil firms cut petrol rates by 56 paise a litre (ET)
RIL scales down KG – D6 spend by almost $3bn (ET)
14 FDI proposals worth INR 1.13bn cleared (ET)
DGCA to ask kingfisher to stop ticket sales it had restarted (ET)
Bank of India lowers term deposit rates by up to 1.25% (ET)
USL and ABD call it even on officer’s choice claim (ET)
RPower told to stop mining in blocks near Sasan UMPP (ET)
PFC, REC to lend INR 50bn each to TNEB (BS)
Aban Offshore bags INR 8bn order (BS)
Kalpataru bags orders worth INR 6.04bn (BS)

Edelweiss Technical Reflection (ETR) - October 9, 2012-EDEL

Edelweiss Technical Reflection (ETR)

The week's proceedings began on a negative note, carrying on from the 'bearish engulfing / key reversal' day on Friday. Nifty opened at the high of the day which meant, there was going to be selling pressure throughout the session and indeed it closed 1.30% lower, breaching the 5700 mark. Infact, as the ST momentum had rolled bearish on Friday, the weakness was expected and is likely to continue in the immediate near-term until it tests important supports. The session was marked by low volume activity, whereas the breadth was marginally in favor of declining stocks on the back of continued profit taking. Volatility climbed up by 2.3% to 17.17 on the India VIX underlining the weakness, where participants look to buy protection. On the intraday charts, Nifty has dropped below its 21 and 50 hourly EMAs of 5725 and 5713 respectively that will act as immediate resistances. For the coming sessions, we expect the weakness to extend down to 5650 / 5630 where renewed buying is likely to emerge, that should help Nifty get back in trend towards its ultimate target of 5930. Only a close below 5600 would call for a review of the multi-week uptrend.
Barring the gain of 1.20% for the Healthcare index, all other sectoral indices ended the day lower. The biggest knock was taken by Realty (-3.50%), Oil & Gas (-2.77%) and Cap Goods (-2.70%) indices. The weakness was more prominent in the frontline stocks, and the broader market indices managed to outperform as the Mid-cap index lost 0.44% and the Small-cap index lost 0.16%.
Bullish Setups: CNXBANK, BHEL, ICICIBC, PF, JPA
Bearish Setups: JSP, HMCL, BJAUT, IRB

Report on Bajaj Corp - IndiaNivesh Sec

Bajaj Corp Ltd. (BCL) | Q2FY13 Result Update | Inline Performance - margin expansion led to positive surprise | Q2FY13 Result Highlights: Bajaj Corp Ltd (BCL) performance in Q2FY13 quarter was in-line with our expectations. BCL’s top line grew by 27.2% yoy (down 1.6% qoq) to Rs.1,359mn (INSPL est: Rs.1,377 mn) led by 18.70% yoy and 8.5% yoy growth in volume and pricing, respectively. Driven by healthy revenue, EBITDA grew 42.6% yoy and 0.5% qoq to Rs.391 mn (INSPL est: Rs.384 mn). EBITDA margin expanded +310bps yoy to 28.8% (v/s INSPL est: 27.9%) on-account of decline in material and advertisement expenditures, partially offset by increase in other expenditures. During the quarter, LLP prices declined 6% yoy (+0.6% qoq) and refined oil prices went up by 26% yoy (+11.6% qoq). BCL reported other income of Rs.98 mn v/s Rs.90 mn in Q1FY13 and Rs.99mn in Q2FY12. Tax rate during the quarter remain constant at 20% on qoq basis (but below on yoy basis - 22% in Q2FY12). Net profit grew 33.7% yoy (up 2.1% qoq) to Rs.384 mn (INSPL est: Rs.364mn) led by higher EBITDA base and other income. Adjusting other Income, net profit went up 51.7% yoy, however down 0.1% qoq to Rs.286mn. Valuations: At CMP or Rs.187, stock is trading at 19.2x FY13E and 16.1X FY14 earnings estimates; which is 49%/81% discount to average FMCG industry forward P/E multiples. We like the BCL’s ability to report high double-digit revenue growth on back of strong brand, deep distribution network and leadership position in high growth almond light hair oil segment. Further, utilization of cash for acquisition and new product launch seems to be a right strategy to diversify revenue risk. We maintain our HOLD rating with upward revision in the target price of Rs.205 (9.6% upside potential) on stock.

Regards

IndiaNivesh Research

IT Sector Update - Earnings preview: September 2012 quarter :: BRICS Research

IT
September 2012 quarter earnings preview


We do not expect a spike in the revenue growth  of IT Services companies in
Q2FY13,  in spite of Q2 being historically a strong quarter for the sector,
due  to  the  lingering  effects  of  weak  discretionary spending, delayed
project  starts  and  pricing pressure. The key issues to watch for will be
changes  in market share, spending pattern of IT budgets and sustainability
of  margins.  The performance on the margins front is expected to be mixed,
based  on  their  varying  annual  wage hike cycles and acquisition related
costs, as well as the tapering effect of visa and higher GnA costs reported
in Q1FY13.

Oct 9: Morning News (click on link to read article): IFCI Financial Services Limited

Morning News (click on link to read article)

Economic Times		Business Standard
Ø  IMF cuts global growth forecast; prods Europe, US Ø  Euro zone launches $650 bn rescue fund; Greece, Spain struggle Ø  Dr Reddy's expands operations in UK Ø  DERC to adjust tariff for low-end power consumers Ø  'Govt expects $5.2 bn fee from existing airwaves'		Ø  One-time spectrum fee to net Rs 27,000 cr Ø  New drug pricing policy likely to hurt MNCs more Ø  DIIs net sell Rs 779cr, FIIs net buy Rs 564cr Ø  Total market turnover on Oct 8 at Rs 1.3 lakh crore Ø  Rupee posts biggest single-day fall in 3 months Ø  Tata, R Power eye stake in GSPC Pipavav Power
Business Line		Mint
Ø  Lower input cost to boost profits of cement makers Ø  IOC reduces petrol price by 56 paise/litre Ø  RBI open to raising intl e-commerce transactions cap Ø  India needs to prioritise spending in health, education & physical infrastructure: Crisil Ø  Sterlite Copper starts despatch of anodes		Ø  Telecom stocks rise on spectrum recommendation Ø  HTC’s Q3 net profit plunges 79% Ø  Cisco cuts ties to China’s ZTE after Iran probe Ø  RIL’s key gas fields may run out in 5 years: analysts Ø  Sebi and finance ministry, too, to blame for flash crash
Financial Express		Financial Chronicle
Ø  Guar gum future bright on shale booster Ø  NMDC cuts iron ore price by 11% Ø  2G cancelled licenses: Govt to refund cos Ø  Kingfisher not systemic risk: Chakrabarty Ø  Essel Group sells 1.5% more in IVRCL Ø  ‘Reduce’ rating on Adani Power as no change in co’s financials		Ø  Chidambaram urges reform push, hopeful on economy Ø  eGoM recommends telcos pay one-time fee Ø  TCS bets on newly-acquired CRL to take on global biggies Ø  High-level committee meets to consider price band for RINL IPO Ø  Govt to address retro amendment issue before Budget Ø  Bourses to add more firewalls to protect from freak trades

(Click on link to view article)

Thanks and Regards

IFIN: IFCI Financial Services Limited

Sales Traders Commentary - October 9, 2012-EDEL

Sales Traders Commentary

The domestic equity market drifted sharply lower on Monday with the Sensex falling below 18800 and Nifty losing the 5700 mark on aggressive selling pressure across counters. Global markets were also subdued.
The Sensex closed at 18708, down 230 points, while the Nifty slipped 71 points to end the day at 5676.
Major gainers were Sun Pharmaceutical Industries (3.67%), Bharti Airtel (1.62%), Cipla (0.87%), Jindal Steel & Power (0.79%), ITC (0.65%) and NTPC (0.32%).
Major losers were Reliance Industries (4.51%), Hindalco Industries (3.52%), Bharat Heavy Electricals (3.44%), Larsen & Toubro (3.09%), State Bank of India (2.97%) and Tata Motors (2.87%).
The HC index was up 1.20%. Major gainers were Aurobindo Pharma (3.61%), Apollo Hospitals Enterprise (2.28%), Cadila Healthcare (2.22%), Cipla (0.87%) and Divis Laboratories (0.47%).
The Realty index was down 3.5%. Major losers were DLF (7.24%), Indiabulls Real Estate (4.11%), Housing Development and Infrastructure (2.63%), Anant Raj Industries (2.06%) and Oberoi Realty (0.5%).
The Oil & Gas index slipped 2.77%. Major losers were Oil India (1.22%), Hindustan Petroleum Corporation (0.43%), Gujarat State Petronet (0.43%), Bharat Petroleum Corporation (0.25%) and G A I L (India) (0.11%).
The Capital Goods index was down 2.7%. Major losers were Bharat Heavy Electricals (3.44%), A B B (2.63%), Alstom India (1.49%), BEML (1.34%) and A I A Engineering (0.05%).
Major losers in the mid–cap space were Allcargo Logistics (1.68%), Aban Offshore (1.62%), CORE Education and Technologies (1.62%), Alstom India (1.49%) and AIA Engineering (0.05%).
Major losers among small caps were Trident (3.54%), Aanjaneya Lifecare (3.43%), ABG Infralogistics (1.97%), Aarti Industries (0.32%) and Styrolution ABS (India) (0.14%).
Globally, Asia ended on a mixed note while European indices were trading in the red.