India Strategy- Equities in Tug o’ War; Money in Stocks:: Morgan Stanley

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Lots of headwinds…
High and rising oil prices, uncertain DM world, slowing domestic growth, fragile politics, stubborn inflation, tight domestic liquidity, and rising rates are hurting equities.
…some positives too

Equities have suffered a 17% loss vs. EM since Oct-10.

Valuations are looking attractive, especially on an absolute basis, and for the broader market. The market is pricing in slower near-term growth and implying an attractive 14.5% long-term return.

Interest rates are closer to the peak than before given the recent RBI rate hike.

Earnings growth appears to be nearing a trough given the margin compression that has already happened. ROE, too, is off the bottom.

Politics and policy could surprise positively given how low expectations are.

The market is cautiously positioned if our sentiment indicator is a guide.

Companies and retail continue to be constructive on equities even as FIIs are sellers.

Buy COROMANDEL INTERNATIONAL; Target 384 ::Anand Rathi

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Investment Rationale
• Company works in 4 major segments – Fertilizer, crop
protection, specialty nutrients, rural retailing.
•Farm mechanization and Organic manure is the new growth
driver from the retail ruraling
•Strong free cash flows to continue going forward
•Successful organic growth with capacity expansion plans on
track.
•Policy change in the Fertilizer sector is beneficial on the
margins front
Company Background
Coromandel Fertilisers Ltd, a part of the Murugappa Group of
companies is a leading manufacturer of a wide range of
fertilisers and pesticides. They are the producer of phosphatic
fertilisers, plant protection chemicals, specialty nutrients, and
sulphur bentonite, potash.
They are in the business of manufacturing and marketing of
pesticides, which includes insecticides, fungicides, herbicides
and plant biostimulants.
Their brand name includes Gromor, Paramfos, Parry
Sulphur and Parry Gold.
It is the second largest producer of Di-Ammonium Phosphate
in India with a strong presence in South India.
The company's fertilizer plants are located are located at
Visakhapatnam and Kakinada in Andhara Pradesh, Ennore
and Raniper in Tamil Nadu

Jubilant Foods – JUBI IN ::Headroom for penetration led growth is substantial::CLSA

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Jubilant Foods – JUBI IN (O-PF)
Business description:
Master franchisee for Domino’s in India. Dunkin’ Donuts added
recently
End market for Domino’s growing at 20%+ with broad growth
and a penetration led shift towards takeaway and chain formats
Rising middle class income, evolving attitudes and a young
population drive this
Its strong brand and retail model generate healthy margins and
return ratios
Store portfolio over the 380 mark
News and updates
Financials
Price: Rs673
Mkt Cap: US$962m
Avg T/O: US$19.0m
Jubilant plans to increase its pace of store expansion
to 80 in FY12 against 70-72/year in FY10-11
The company is targeting same store sales growth of
20% in FY12
The rollout of the Dunkin’ Donuts will be gradual with
the first store opening in 4QFY12 and 80-100 stores
over five years
Domino’s has introduced credit card payments

Divi's Lab : Strong 4Q beat highlights higher revenue visibility; Buy:: BofA Merrill Lynch

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Divi's Lab
   
Strong 4Q beat highlights
higher revenue visibility; Buy
„Raise PO post 4Q beat; Reiterate Buy
Following 70% profit beat in 4Q, driven largely by 30% higher than expected
sales, we raise EPS forecasts by 12-16% over FY12-13E. Consequently, increase
PO to Rs900, also factoring roll over to FY13E, retaining P/E multiple of 20x,
justifiable on stronger visibility and return ratios.  

Steels - India:: Domestic fundamentals moderating; lowering POs ::BofA Merrill Lynch

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Steels - India
   
Domestic fundamentals
moderating; lowering POs
„Maintain cautious stance on SAIL, Tata & JSPL; keep Buy on JSW
We lower POs for Indian steel cos. by 3-10% due to moderating fundamentals &
near term margin risks. We expect domestic prices to correct further near term
due to rising headwinds. Lower steel prices & higher coking coal costs should
lead to margin pressure near term. We have cut our FY12e EPS by 1-5% (4-20%
below consensus) as marginally higher steel price est. (on MTM/ higher costs) is
offset by higher costs. Despite recent pull back in Indian steel equities, we stay
cautious near term & stock selective given earnings risks & scope for further derating, though stock-specific factors may lead to divergence in performance.  

JSW Steel : Strong 4QFY11 results :CLSA

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Strong 4QFY11 results
JSW’s 4Q EBITDA/t rose 52% QoQ to US$215/t and drove 26% beat at net
profit. However, margins will decline in 1HFY12 as the impact of US$330/t
coking coal will flow through. JSW has finally achieved some progress in its
overseas mining projects, which could now lead to some upside to our
estimates. The 3.2mtpa expansion at Vijaynagar will come online in Jun-11
and will drive strong volume growth over FY12-13. Plan for further expansion
to 12mtpa by Jun-13 is a positive as it will extend the growth profile beyond
FY13. We are incrementally positive on JSW given stronger than expected 4Q
results, progress in overseas mining projects and new India expansion plans.
Strong 4Q results but margins likely to decline near-term
JSW reported 4Q net profit of Rs8.3bn – up 29% YoY and 26% above estimates
led by higher-than-expected volumes and lower raw material costs. 4Q volumes
were at 1.7mt, up 14% YoY and ahead of estimates. ASPs were up 12% QoQ – in
line with expectations. EBITDA came in at Rs16.5bn - up 24% YoY and 16% above
estimates. EBITDA/t rose 52% QoQ to US$215/t - 9% above estimates due to
lower-than-expected raw material and power costs. However, we expect margins
to decline in 1H12 as the impact of US$330/t coking coal will flow through.
Progress in overseas mining projects finally
JSW has finally achieved some progress in its overseas mining projects. It has
started shipments from Chilean iron ore mines in Apr-11 and is targeting 1mtpa
production in FY12. JSW has also received all permits to start operations at its US
coking coal mines and plans to start production in Jul-11. We have not assigned
any value to these projects yet, and hence these could lead to potential upside.
The US mills continued to disappoint with low utilization in 4Q. JSW is targeting
40% utilization and positive net profit in FY12; but we remain cautious here.
Expansion to 12mtpa at Vijaynagar – a positive
JSW’s 3.2mtpa expansion to 10mtpa capacity at Vijaynagar is slightly delayed and
will now be commissioned in Jun-11. JSW has also announced further expansion
to 12mtpa at Vijaynagar by Jun-13 via debottlenecking of existing blast furnace
and setting up of a new electric arc furnace. While this Rs27bn project will
increase capex and gearing near-term, we see the project as a positive as it will
extend JSW’s growth profile beyond FY13.
Incrementally positive post-4Q results; we will revisit estimates shortly
We are incrementally positive on JSW given– (1) better-than-expected 4Q results,
(2) progress in the overseas mining projects, and (3) plan for further expansion at
Vijaynagar from 10mtpa to 12mtpa by Jun-13. We continue to have concerns on
rising capex and debt levels near-term, but believe that most of the risks are
priced in post 21% underperformance vs. the Sensex in YTD-CY11 We will review
our estimates shortly post some clarifications from the management. Retain O-PF.

JSW Steel – Good quarter, tough ones ahead ::RBS

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Buoyant pricing helped JSW Steel post strong earnings for 4QFY11, which in our view is unlikely
to be repeated in the near term. We believe earnings growth from expansion is largely priced in,
and expect investor focus to shift to the resilience of margins in the high cost environment.
Maintain Sell, TP cut to Rs828.