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9am with Emkay |
Reliance Communication Q2FY11 Result Update; Disappointment continues, Downgrade to REDUCE; Target: Rs135
n Q2FY11 EBIDTA grew by 1.7% QoQ to Rs16.6bn (below est of Rs17.6bn), PAT of Rs4.45bn led by lower interest expense
n ARPU falls 6.2% QoQ to Rs122 purely on MOU decline as RPM remains stable. Wireless traffic growth absent
n Cut EBIDTA and EPS estimates by 1.8% /3.5% and 14% /16.3% for FY11E /12E respectively
n Cut target price to Rs135 (from Rs180) and rating to REDUCE from HOLD earlier. Valuations expensive at 9.2x and 8.8x EV/EBIDTA for FY11E and FY12E respectively
Wipro Company Update; Tries to catch up to peer growth; REDUCE; Target: Rs 420
n Positive commentary on demand, expects CY11 budgets to be up by ~2-4%. Expects continuation of strong revenue traction in Europe (as in Sep’10 qtr) for the sector
n Wipro attempts to get it’s act together to cut revenue underperformance V/s peers (we believe it’s ‘WIP’). See downside risks to mgns driven by cost pressures/ lower rev growth
n Valuation discount to peers appears justified given lower than peer growth and margin headwinds ahead. Retain REDUCE with a price target of Rs 420
n Dealer Comments
The markets started the day’s session on a positive note with 50 odd point’s upward gap led by mixed cues from the world markets. Post positive opening markets immediately gave up the initial gains and slipped in the red and thereafter saw continuous selling pressure as the day progressed which intensified at the fag end of the day. With no major positive trigger in the offing markets reacted to long overdue correction in the present scenario. Given the global uncertainties and political drama unfolding in India related to 2G spectrum allocation scam, probable another rate hike by China to curb excessive capital inflows and year end profit booking by FII’s continue to weigh on the market sentiment as of now. As a result traders opted to unwind position ahead of the weekend. Finally the markets closed the day and the week ended on a negative note towards the end at almost day’s lows with Sensex losing 345 points or 1.73% lower to settle at 19585 levels while Nifty lost 109 points or 1.81% lower to settle at 5890 levels. On a weekly basis both Sensex and Nifty plunged 3% each while Midcap index lost 3% and Smallcap index lost 6.3% each respectively. On a weekly basis among the sectoral indices Realty index was down 9.2%, Oil & Gas index down 5.2%, Bankex down 3.4% and Metal, IT and Capital Goods indices down 2.5 – 3% each respectively. The overall traded volumes were lower compared to the earlier day by almost 10% and were at Rs 2156 bn. While delivery based volumes were higher compared to the earlier day at 43.6% of the total traded turnover. Among the Fund activities FII’s were net sellers to the tune of Rs 2.55 bn on 18th November 2010. While on 19th November 2010, FII’s bought shares worth Rs. 3.68 bn in cash segment (provisional) while in the F&O segment they were net buyers to the tune of Rs 7.34 bn whereas Domestic Funds bought shares worth Rs. 3.00 bn (provisional).
n Technical Comments
At the trend-line support
After spending a major portion of the day within a narrow range, finally, Nifty saw a notable sell-off in the final hour of trade. Moreover, Nifty is still standing at a crucial trend-line support, which is the last ray of hope for the bulls. However, a close below 5900 is a sign of worry, but we will still wait for a close below the bullish trend-line (grey one) to alter our medium term bias.
BSE Metal:
BSE Metal index is standing at the lower boundary of the rising channel and hence we are expecting a minor bounce from current levels upto 16900. Also it is near the support of 200-DSMA, which is also a key pivotal point to watch out for.
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