HOLD CMP: Rs287 Target Price: Rs308 ______________________________________ Increasing approvals for niche filings and sustainable FTF pipeline with 10-12 ANDA launches annually, improve US market revenue visibility Domestic market to sustain growth momentum and outperform industry by 200bps Higher securitized receivables, huge intangibles and R&D capitalization remain key concerns Maintain earning estimates with a Hold rating
Sunday, December 6, 2009
Monday, November 30, 2009
Market News & Trends
HOT FROM THE PRESS
* ECONOMY : 3Q CY09 GDP data to be released @ 11am.. consensus est @ +6.3% v/s
6.1% in 2Q CY09 and 7.7% in 3Q CY08
* BANKS : RBI has asked banks to furnish details of their direct & indirect
exposure to Dubai World.. seeks info on extent of defaults, if any, that the
banks have seen in their Dubai & UAE portfolios
* STEEL : Govt plans to to launch ultra mega steel projects to accelerate
creation of large steel capacity in the country to meet the growing demand
* AUTO : rpts carmakers are gearing up for a two-phase price hike due to
increasing input costs & need to adhere to stricter emission norms
* PHARMA : India's drug retail market grew by 29% yoy in value terms in Oct..
its more than double the avg monthly revenue growth rate of 13-14% recently
* ONGC : finds traces of a new oil reserve in Gujarat (~ 20k barrels of oil per
day) which cud increase the cos total onshore oil production by about 20%
* GAMMON INDIA : plans to make a yearly invt of Rs50bn for roads development
projects and looking to bid for 10 projects by fiscal end
* LUPIN : US FDA starts inspection of cos plant in Indore... once approved co
can start selling oral contraceptive drug produced in that facility to the US
* L&T : forming a JV with state-owned Nuclear Power Corp of India to explore
co-operation in manufacturing & setting up nuclear power plants in India
* GMR INFRA : Delhi Intnl Airport may rise Rs 13bn from sale of 45 acres which
is 42% higher than estimated in Jan09
* WOCKHARDT : reaches out of court settlement with DBS over repayment of Rs
440mn @ 19% discout for loan taken in 2007
* TATA MOTORS : Co rejects £10mn loan fm UK govt saying it can get better terms
elsewhere.. CFO says fully repaid JLR bridge loan, expects more cost cutting
measures in coming qtrs.. Co to look at fund raising options to cut debt
* TATA TEA : CFO says Co may seek overseas acquistions for expansion
Corporate News – Industry trends
* Aditya Birla Retail, the country’s second biggest supermarket
operator, is considering an initial public offer (IPO) and will time it as
soon as the company starts earning profits (BS)
* Tata Group, which owns British car maker JLR, has rejected a £10 mn
loan offered by the UK government to develop electric cars at the
group’s European Technical Centre, according to a report in the Times
today (BS)
* The Oil and Natural Gas Corporation has found traces of a new oil
reserve in Gujarat which could increase the company’s total onshore oil
production by about 20%; The new hydrocarbon structure located at
North Kadi in the Mehsana area is likely to produce at least 1 mmtpa of
oil (about 20,000 barrels of oil per day). This is a little less than half
the oil production from Mehsana, the company’s largest onshore field
with a production of 2.2 mmtpa (BS)
* Infrastructure player Gammon India plans to make a yearly
investment of up to Rs 50bn for roads development projects and is
looking to bid for 10 projects by fiscal end. “As of now we plan to
invest Rs 10-50bn every year on highways ... We would bid for about
10 projects by March 2010 (BS)
* Tokyo-based Japan Steel Works is focusing on emerging economies
like India to expand its overseas operations against the backdrop of
weakening performance in major markets like the US (BS)
* Debt-ridden pharmaceutical company Wockhardt and DBS Bank
have agreed to an out-of-court settlement of a dispute over loans the
drug manufacturer had taken from the Singapore-based lender (BS)
* Carmakers are gearing up for a two phase price hike after
almost a year, thanks to increasing input costs and the need to
switch to stricter emission norms from April; prices of popular vehicles
such as Mahindra Scorpio, Maruti Swift and Honda Civic may go up by
Rs 10,000-20,000 within a month or so as the raw material prices have
gone up by 10-15% and also the Japanese carmakers are concerned
by the rise in yen valuation (ET)
* Larsen and Toubro and state-run Nuclear Power Corporation will
announce on Monday formation of an Rs 20bn joint venture for making
forgings, a crucial component in construction of nuclear reactors, for
new plants (ET)
* INDIA’S drug retail market grew by a whopping 29.24% in
value terms in October this year over the year-ago period, more
than double the average monthly revenue growth rate of 13-14% in
the recent past, according to market research firm ORG IMS (BS)
* With the RIL operated KG-basin D6 block gas flowing in, the gasbased
power generation across the country has registered a healthy
turnaround; in October, a total of 15 gas-based stations recorded a
plant load factor of over 80% due to improved fuel availability, as
against around just 50% last year (BL)
* After the euphoria, “affordable” realty developers are faced with
the reality of excesses; consider this: In May this year, property
developer Jaypee Greens put the sold-out sign within hours of
launching its affordable project Aman on the Greater Noida
expressway. The 3,000-odd apartments were priced at Rs 2,100 per
square feet. Another Jaypee Group company, which was offering flats
along the same expressway for Rs 4,500-6,000 a sq ft, was finding the
going tough (BS)
* With just a day left for the Government-imposed ban on illegal
handsets to come into effect, the mobile operators have sought a
two-month extension of the deadline. The operators who have set up
1,600 outlets for implanting the IMEI number on handsets through an
standardised software are nowhere near reaching out to the 20 mn
consumers suspected of owning a handset without the number (BL)
* MTNL, which operates in Mumbai and Delhi, has 12.4 MHz spectrum,
the highest amount given to any operator so far (Mint)
* Jay Shree Tea & Industries, a B K Birla group company, is close to
announcing its first overseas acquisition, in Uganda; "We are in an
advanced stage of negotiations for acquisition in Uganda and we hope
to finalise it in a months time," (BS)
International trends
* The United Arab Emirates’ central bank said it “stands behind” the
country’s local and foreign banks, which face losses from Dubai World’s
possible default, and offered them access to more money under a new
facility (BS)
* ECONOMY : 3Q CY09 GDP data to be released @ 11am.. consensus est @ +6.3% v/s
6.1% in 2Q CY09 and 7.7% in 3Q CY08
* BANKS : RBI has asked banks to furnish details of their direct & indirect
exposure to Dubai World.. seeks info on extent of defaults, if any, that the
banks have seen in their Dubai & UAE portfolios
* STEEL : Govt plans to to launch ultra mega steel projects to accelerate
creation of large steel capacity in the country to meet the growing demand
* AUTO : rpts carmakers are gearing up for a two-phase price hike due to
increasing input costs & need to adhere to stricter emission norms
* PHARMA : India's drug retail market grew by 29% yoy in value terms in Oct..
its more than double the avg monthly revenue growth rate of 13-14% recently
* ONGC : finds traces of a new oil reserve in Gujarat (~ 20k barrels of oil per
day) which cud increase the cos total onshore oil production by about 20%
* GAMMON INDIA : plans to make a yearly invt of Rs50bn for roads development
projects and looking to bid for 10 projects by fiscal end
* LUPIN : US FDA starts inspection of cos plant in Indore... once approved co
can start selling oral contraceptive drug produced in that facility to the US
* L&T : forming a JV with state-owned Nuclear Power Corp of India to explore
co-operation in manufacturing & setting up nuclear power plants in India
* GMR INFRA : Delhi Intnl Airport may rise Rs 13bn from sale of 45 acres which
is 42% higher than estimated in Jan09
* WOCKHARDT : reaches out of court settlement with DBS over repayment of Rs
440mn @ 19% discout for loan taken in 2007
* TATA MOTORS : Co rejects £10mn loan fm UK govt saying it can get better terms
elsewhere.. CFO says fully repaid JLR bridge loan, expects more cost cutting
measures in coming qtrs.. Co to look at fund raising options to cut debt
* TATA TEA : CFO says Co may seek overseas acquistions for expansion
Corporate News – Industry trends
* Aditya Birla Retail, the country’s second biggest supermarket
operator, is considering an initial public offer (IPO) and will time it as
soon as the company starts earning profits (BS)
* Tata Group, which owns British car maker JLR, has rejected a £10 mn
loan offered by the UK government to develop electric cars at the
group’s European Technical Centre, according to a report in the Times
today (BS)
* The Oil and Natural Gas Corporation has found traces of a new oil
reserve in Gujarat which could increase the company’s total onshore oil
production by about 20%; The new hydrocarbon structure located at
North Kadi in the Mehsana area is likely to produce at least 1 mmtpa of
oil (about 20,000 barrels of oil per day). This is a little less than half
the oil production from Mehsana, the company’s largest onshore field
with a production of 2.2 mmtpa (BS)
* Infrastructure player Gammon India plans to make a yearly
investment of up to Rs 50bn for roads development projects and is
looking to bid for 10 projects by fiscal end. “As of now we plan to
invest Rs 10-50bn every year on highways ... We would bid for about
10 projects by March 2010 (BS)
* Tokyo-based Japan Steel Works is focusing on emerging economies
like India to expand its overseas operations against the backdrop of
weakening performance in major markets like the US (BS)
* Debt-ridden pharmaceutical company Wockhardt and DBS Bank
have agreed to an out-of-court settlement of a dispute over loans the
drug manufacturer had taken from the Singapore-based lender (BS)
* Carmakers are gearing up for a two phase price hike after
almost a year, thanks to increasing input costs and the need to
switch to stricter emission norms from April; prices of popular vehicles
such as Mahindra Scorpio, Maruti Swift and Honda Civic may go up by
Rs 10,000-20,000 within a month or so as the raw material prices have
gone up by 10-15% and also the Japanese carmakers are concerned
by the rise in yen valuation (ET)
* Larsen and Toubro and state-run Nuclear Power Corporation will
announce on Monday formation of an Rs 20bn joint venture for making
forgings, a crucial component in construction of nuclear reactors, for
new plants (ET)
* INDIA’S drug retail market grew by a whopping 29.24% in
value terms in October this year over the year-ago period, more
than double the average monthly revenue growth rate of 13-14% in
the recent past, according to market research firm ORG IMS (BS)
* With the RIL operated KG-basin D6 block gas flowing in, the gasbased
power generation across the country has registered a healthy
turnaround; in October, a total of 15 gas-based stations recorded a
plant load factor of over 80% due to improved fuel availability, as
against around just 50% last year (BL)
* After the euphoria, “affordable” realty developers are faced with
the reality of excesses; consider this: In May this year, property
developer Jaypee Greens put the sold-out sign within hours of
launching its affordable project Aman on the Greater Noida
expressway. The 3,000-odd apartments were priced at Rs 2,100 per
square feet. Another Jaypee Group company, which was offering flats
along the same expressway for Rs 4,500-6,000 a sq ft, was finding the
going tough (BS)
* With just a day left for the Government-imposed ban on illegal
handsets to come into effect, the mobile operators have sought a
two-month extension of the deadline. The operators who have set up
1,600 outlets for implanting the IMEI number on handsets through an
standardised software are nowhere near reaching out to the 20 mn
consumers suspected of owning a handset without the number (BL)
* MTNL, which operates in Mumbai and Delhi, has 12.4 MHz spectrum,
the highest amount given to any operator so far (Mint)
* Jay Shree Tea & Industries, a B K Birla group company, is close to
announcing its first overseas acquisition, in Uganda; "We are in an
advanced stage of negotiations for acquisition in Uganda and we hope
to finalise it in a months time," (BS)
International trends
* The United Arab Emirates’ central bank said it “stands behind” the
country’s local and foreign banks, which face losses from Dubai World’s
possible default, and offered them access to more money under a new
facility (BS)
Hold Tata Power
Tata Power
Hold
Price: Rs1,323 Target Price (Mar 11): Rs1,270
1H FY10 Consolidated Results
* Consolidated Sales flat; PAT at Rs3.8 bn: Tata Power (TPC) reported
Sep qtr consolidated profits at Rs3.8 bn (down 29.3% YoY) on lower
exchange gains (Rs287 mn in 2Q10 vs. Rs764 mn in 2Q09) and higher tax
provisioning at 38.8% (vs. 16.4% in 2Q09). Higher taxes were on account
of higher MAT provisioning for NDPL (partly includes 1Q provisions) and
under-provisioning in coal assets last year (in 2Q09). Revenues remained
flat YoY at Rs45.6 bn despite higher volumes in coal business and
translational gains (+13.5% exchange rate movement in 2Q FY10). For
1H10, reported PAT grew 19.4% YoY on back of 6.7% YoY sales growth
and 500 bps improvement in EBITDA margins (due to lower fuel cost).
* Coal Sales volumes up 23%; ASP down 29% to US$57.9/MT: TPC
reported 6.8% de-growth in coal segment sales with 390 bps decline in
margins to 30.1%. The margins declined despite 13.5% currency gains and
record 23% YoY gain in volumes (to 15.4 MT), as sale price declined
sharply to $57.9/MT (29.4% lower YoY). Volumes were up 23% YoY as the
weather conditions were favorable. Cash cost of production was also
reduced to US$31.1/MT (-19.6% YoY). Coal SPVs reported $9 mn profits
for the quarter (post- interest repayment for acquisition debt) vs. $5 mn
loss in 2Q09. Outstanding debt as of Sep’09 is $740 mn with a cash
balance of $100 mn. Management guided for effective tax rate of 35-40%
(we have built 40%) as management fees remains tax deductable.
* Subsidiaries performance: NDPL (delhi distribution business) recorded
41% YoY growth in sales but its PAT declined 32%, primarily due to extra
provisioning of tax given higher MAT rate. Powerlinks, almost doubled its
profits to Rs206 mn as its sales grew 34.5% to Rs751.1 mn, on account of
new CERC norms as well as higher capitalization in 2Q10 (Rs63.2 mn
benefit). Tata Power Trading registered 1% sales growth and 8% PAT
growth despite 27% YoY increase in volumes (to 807 MU) traded, as the
average tariffs declined 20% YoY to Rs5.6/kWh from Rs7.1/kWh.
* Lower TP to Rs1,270; maintain Hold: While we reduce Coal ASP for
CY09 to $62/MT (inline with Bumi’s guidance) and lower merchant tariffs to
Rs5.5 (from Rs6.5/kWh earlier), we have tried to capture merchant upsides
from 450 MW (out of Reliance Infra’s 500 MW PPA expiring by Mar’10) by
giving 40% ROE to proportionate regulated equity for MLA (Rs12.5 bn).
Lower ASP for coal leads to Rs70 decrease in our valuation of coal assets to
Rs333/share. Adjusting for $300 mn FCCB dilution, our new TP at Rs1,270
(for Mar’11) offers 4% downside (see Exhibit 5) from current levels.
Maintain Hold.
Hold
Price: Rs1,323 Target Price (Mar 11): Rs1,270
1H FY10 Consolidated Results
* Consolidated Sales flat; PAT at Rs3.8 bn: Tata Power (TPC) reported
Sep qtr consolidated profits at Rs3.8 bn (down 29.3% YoY) on lower
exchange gains (Rs287 mn in 2Q10 vs. Rs764 mn in 2Q09) and higher tax
provisioning at 38.8% (vs. 16.4% in 2Q09). Higher taxes were on account
of higher MAT provisioning for NDPL (partly includes 1Q provisions) and
under-provisioning in coal assets last year (in 2Q09). Revenues remained
flat YoY at Rs45.6 bn despite higher volumes in coal business and
translational gains (+13.5% exchange rate movement in 2Q FY10). For
1H10, reported PAT grew 19.4% YoY on back of 6.7% YoY sales growth
and 500 bps improvement in EBITDA margins (due to lower fuel cost).
* Coal Sales volumes up 23%; ASP down 29% to US$57.9/MT: TPC
reported 6.8% de-growth in coal segment sales with 390 bps decline in
margins to 30.1%. The margins declined despite 13.5% currency gains and
record 23% YoY gain in volumes (to 15.4 MT), as sale price declined
sharply to $57.9/MT (29.4% lower YoY). Volumes were up 23% YoY as the
weather conditions were favorable. Cash cost of production was also
reduced to US$31.1/MT (-19.6% YoY). Coal SPVs reported $9 mn profits
for the quarter (post- interest repayment for acquisition debt) vs. $5 mn
loss in 2Q09. Outstanding debt as of Sep’09 is $740 mn with a cash
balance of $100 mn. Management guided for effective tax rate of 35-40%
(we have built 40%) as management fees remains tax deductable.
* Subsidiaries performance: NDPL (delhi distribution business) recorded
41% YoY growth in sales but its PAT declined 32%, primarily due to extra
provisioning of tax given higher MAT rate. Powerlinks, almost doubled its
profits to Rs206 mn as its sales grew 34.5% to Rs751.1 mn, on account of
new CERC norms as well as higher capitalization in 2Q10 (Rs63.2 mn
benefit). Tata Power Trading registered 1% sales growth and 8% PAT
growth despite 27% YoY increase in volumes (to 807 MU) traded, as the
average tariffs declined 20% YoY to Rs5.6/kWh from Rs7.1/kWh.
* Lower TP to Rs1,270; maintain Hold: While we reduce Coal ASP for
CY09 to $62/MT (inline with Bumi’s guidance) and lower merchant tariffs to
Rs5.5 (from Rs6.5/kWh earlier), we have tried to capture merchant upsides
from 450 MW (out of Reliance Infra’s 500 MW PPA expiring by Mar’10) by
giving 40% ROE to proportionate regulated equity for MLA (Rs12.5 bn).
Lower ASP for coal leads to Rs70 decrease in our valuation of coal assets to
Rs333/share. Adjusting for $300 mn FCCB dilution, our new TP at Rs1,270
(for Mar’11) offers 4% downside (see Exhibit 5) from current levels.
Maintain Hold.
Buy KEC International
KEC International
Buy
Price: Rs564 Target Price (Sep 10): Rs675
Brighter quarters ahead
We met with the management of KEC International. Key takeaways:
* Strong order pipeline both domestic and international: KEC continues
to record healthy order inflows and has received Rs7.2 bn worth of orders
since October’09, out of which Rs5.1 bn are overseas orders. It expects
strong order inflows in the coming quarters too as visibility in the
international markets is improving. Domestically, PGCIL is expected to order
out large number of projects (~Rs90-100 bn) in next 4 months 2H10 vs.
Rs30 bn in 1H10, similar to last years’ trend (Rs102 bn in 2H09 vs. Rs36 bn
in 1H09).
* US market seen as next leg for growth: KEC management expects US
market to provide next leg for growth and is on a lookout for possible
acquisition or a JV with a local partner, to enhance its presence. The
National Renewable Energy Laboratory recently published a report
concluding that inadequate transmission capacity is the primary cause of all
wind energy curtailment, followed by US Govt. announcing US$3.4 bn
grants to upgrade the country's aging electric grid. Matched by 1:1 funding
by private sector, total investments may cross US$7 bn for grid expansion
in the US.
* Introduce FY12; include RPG Cables: We increase earnings by 8.3% and
7.5% for FY10E and FY11E respectively, as ~Rs1.6 bn accumulated losses
at RPGC will be offset against taxable PBT. We cut our operating margins
estimate to 10.6% (from 10.8%) for FY10E and 10.2% (from 10.7%) for
FY11E primarily due to low margin (4-6%) RPGC business merger. We also
introduce FY12E with an EPS of Rs60 (+15.4% YoY) on the diluted capital of
Rs514 mn. While the merger is expected to be ROCE dilutive, tax benefits in
next 2 years will increase returns.
* Upgrade to Buy with Sep’10 target price of Rs675: While operational
performance has been tad below expectations so far, we see better visibility
in the order inflows both domestically and internationally in next 2 quarters.
KEC does not have any exposure to Dubai, but the Middle East region
accounts for Rs9.0 bn (~17%of total OB) and we don’t see any reason for
concern from Dubai’s debt crisis. We continue to value KEC at 12x (inline
with sector), but roll forward to Sep’11 adjusted EPS of Rs56 to get a target
price of Rs675 (Rs580). Upgrade to Buy on incremental 20% upside and
robust order visibility.
Buy
Price: Rs564 Target Price (Sep 10): Rs675
Brighter quarters ahead
We met with the management of KEC International. Key takeaways:
* Strong order pipeline both domestic and international: KEC continues
to record healthy order inflows and has received Rs7.2 bn worth of orders
since October’09, out of which Rs5.1 bn are overseas orders. It expects
strong order inflows in the coming quarters too as visibility in the
international markets is improving. Domestically, PGCIL is expected to order
out large number of projects (~Rs90-100 bn) in next 4 months 2H10 vs.
Rs30 bn in 1H10, similar to last years’ trend (Rs102 bn in 2H09 vs. Rs36 bn
in 1H09).
* US market seen as next leg for growth: KEC management expects US
market to provide next leg for growth and is on a lookout for possible
acquisition or a JV with a local partner, to enhance its presence. The
National Renewable Energy Laboratory recently published a report
concluding that inadequate transmission capacity is the primary cause of all
wind energy curtailment, followed by US Govt. announcing US$3.4 bn
grants to upgrade the country's aging electric grid. Matched by 1:1 funding
by private sector, total investments may cross US$7 bn for grid expansion
in the US.
* Introduce FY12; include RPG Cables: We increase earnings by 8.3% and
7.5% for FY10E and FY11E respectively, as ~Rs1.6 bn accumulated losses
at RPGC will be offset against taxable PBT. We cut our operating margins
estimate to 10.6% (from 10.8%) for FY10E and 10.2% (from 10.7%) for
FY11E primarily due to low margin (4-6%) RPGC business merger. We also
introduce FY12E with an EPS of Rs60 (+15.4% YoY) on the diluted capital of
Rs514 mn. While the merger is expected to be ROCE dilutive, tax benefits in
next 2 years will increase returns.
* Upgrade to Buy with Sep’10 target price of Rs675: While operational
performance has been tad below expectations so far, we see better visibility
in the order inflows both domestically and internationally in next 2 quarters.
KEC does not have any exposure to Dubai, but the Middle East region
accounts for Rs9.0 bn (~17%of total OB) and we don’t see any reason for
concern from Dubai’s debt crisis. We continue to value KEC at 12x (inline
with sector), but roll forward to Sep’11 adjusted EPS of Rs56 to get a target
price of Rs675 (Rs580). Upgrade to Buy on incremental 20% upside and
robust order visibility.
Hold Balrampur Chini
Balrampur Chini
Hold
Price: Rs 126 Target Price (Sep’10): Rs122
4QFY09 results lower than estimates
* 4Q09 profits significantly below our estimates-Balrampur Chini’s
(BCML’s) 4QFY09 net profit of Rs388mn, up 544%YoY, was significantly
lower than our estimate of Rs680mn. This was mainly due to (a) lower
sugar volumes and realisation and (b) lower co-generation and distillery
sales than estimates. However, this was partially off-set by tax write backs
of Rs130mn pertaining to FY02-05. While sales of Rs3.89bn were 14%
lower than our estimates, EBITDA came in at Rs0.75bn vs. our estimate of
Rs1.43bn. Lower EBITDA was due to ~9% lower sugar volumes and
realisation than estimates. Management acknowledged lower realisation in
sugar was on account of poor timing of sales. While we are not concerned
about lower sugar sales volume as sugar prices have moved up in 1Q10,
(thus leading to inventory gains), lower realisation still remains a concern.
* Raise our estimates by 11-2% for FY10/11E led by higher sugar
realisation– We raise our FY10 profit estimate by 11% to Rs3.65bn on the
back of higher sugar realisation, raw sugar and co-generation volumes. We
raise our blended sugar realisation assumption by 4% to Rs30.8/kg, in line
with management guidance. We believe our landed cane cost assumption
of Rs215/quintal (vs. current cost of Rs200/quintal) for FY10E seem
reasonable as strong sugar realisation and intense competition among
players would lead to higher cane prices as the season progresses. We
increase our raw sugar volume estimate to 1.2lt (lakh tonnes) from earlier
0.85lt as management guides additional imports of raw sugar in FY10E. We
raise our FY11E earnings by 2% to reflect higher sugar realisation.
* Coal based power contribution may not be significant- Based on
management guidance, we assume 100-80mn units of coal based power in
FY10/11E respectively. However, given high coal (BCML is yet to identify
sources for coal) and in-land transport costs and stable realisation, we
believe coal based co-generation may not be significantly profitable. While
we continue to believe that co-generation (coal and bagasse based
together) provides stability throughout the cycle, we think coal based
power will contribute only 2-3% to consolidated EBITDA for FY10/11E.
* Raise target price marginally, maintain Hold– We continue to value
BCML based on 1 year forward up- cycle multiple of 10x FY11EPS of
Rs12.2and arrive at our Sep’10 (rolled forward from Sep’09) target price of
Rs122 (from Rs119 earlier) and hence maintain Hold at current price
(potential downside of 3%). While stock prices may track sugar prices in
near term, we think concerns over the longevity/severity of the cycle and
higher SAP may emerge, thus impacting the valuation multiples. We
believe key risks to our call are sugar/alcohol realisation higher than our
estimates & lower cane prices than our assumptions.
Hold
Price: Rs 126 Target Price (Sep’10): Rs122
4QFY09 results lower than estimates
* 4Q09 profits significantly below our estimates-Balrampur Chini’s
(BCML’s) 4QFY09 net profit of Rs388mn, up 544%YoY, was significantly
lower than our estimate of Rs680mn. This was mainly due to (a) lower
sugar volumes and realisation and (b) lower co-generation and distillery
sales than estimates. However, this was partially off-set by tax write backs
of Rs130mn pertaining to FY02-05. While sales of Rs3.89bn were 14%
lower than our estimates, EBITDA came in at Rs0.75bn vs. our estimate of
Rs1.43bn. Lower EBITDA was due to ~9% lower sugar volumes and
realisation than estimates. Management acknowledged lower realisation in
sugar was on account of poor timing of sales. While we are not concerned
about lower sugar sales volume as sugar prices have moved up in 1Q10,
(thus leading to inventory gains), lower realisation still remains a concern.
* Raise our estimates by 11-2% for FY10/11E led by higher sugar
realisation– We raise our FY10 profit estimate by 11% to Rs3.65bn on the
back of higher sugar realisation, raw sugar and co-generation volumes. We
raise our blended sugar realisation assumption by 4% to Rs30.8/kg, in line
with management guidance. We believe our landed cane cost assumption
of Rs215/quintal (vs. current cost of Rs200/quintal) for FY10E seem
reasonable as strong sugar realisation and intense competition among
players would lead to higher cane prices as the season progresses. We
increase our raw sugar volume estimate to 1.2lt (lakh tonnes) from earlier
0.85lt as management guides additional imports of raw sugar in FY10E. We
raise our FY11E earnings by 2% to reflect higher sugar realisation.
* Coal based power contribution may not be significant- Based on
management guidance, we assume 100-80mn units of coal based power in
FY10/11E respectively. However, given high coal (BCML is yet to identify
sources for coal) and in-land transport costs and stable realisation, we
believe coal based co-generation may not be significantly profitable. While
we continue to believe that co-generation (coal and bagasse based
together) provides stability throughout the cycle, we think coal based
power will contribute only 2-3% to consolidated EBITDA for FY10/11E.
* Raise target price marginally, maintain Hold– We continue to value
BCML based on 1 year forward up- cycle multiple of 10x FY11EPS of
Rs12.2and arrive at our Sep’10 (rolled forward from Sep’09) target price of
Rs122 (from Rs119 earlier) and hence maintain Hold at current price
(potential downside of 3%). While stock prices may track sugar prices in
near term, we think concerns over the longevity/severity of the cycle and
higher SAP may emerge, thus impacting the valuation multiples. We
believe key risks to our call are sugar/alcohol realisation higher than our
estimates & lower cane prices than our assumptions.
Market Technical Analysis
Market Technical Analysis - Tough Times Don’t Last
The Nifty lost 111 points over the week to close at 4941. A
volatile last week for the markets as they rallied in the first half to
test our ST target of 5130/17200 only to turn overbought and
correct significantly in the second half. The knee-jerk reaction
last Friday has not done much damage to the technical set-up as
the indices continued to sustain above the mentioned support
levels of 16600/4900. We think the decline was just another
shakeout and it provided an excellent buying opportunity. Most of
the technical indicators that were overbought in the middle of last
week have now moved into the neutral zone, which is an
encouraging sign. The daily RSI is close to the oversold line
while the moving averages are almost at the price action. The
only negative trigger last week was the development on the
DM/ADX study, which we think would get reversed (from sell
mode to buy mode) in the coming week. Only on a close below
the support of 4900 do we re-analyse the ST set-up. For the day,
supply seen at 4984/5011. Overall, the indices look set to retrace
their recent losses and get back above 5000/17000.
The Nifty lost 111 points over the week to close at 4941. A
volatile last week for the markets as they rallied in the first half to
test our ST target of 5130/17200 only to turn overbought and
correct significantly in the second half. The knee-jerk reaction
last Friday has not done much damage to the technical set-up as
the indices continued to sustain above the mentioned support
levels of 16600/4900. We think the decline was just another
shakeout and it provided an excellent buying opportunity. Most of
the technical indicators that were overbought in the middle of last
week have now moved into the neutral zone, which is an
encouraging sign. The daily RSI is close to the oversold line
while the moving averages are almost at the price action. The
only negative trigger last week was the development on the
DM/ADX study, which we think would get reversed (from sell
mode to buy mode) in the coming week. Only on a close below
the support of 4900 do we re-analyse the ST set-up. For the day,
supply seen at 4984/5011. Overall, the indices look set to retrace
their recent losses and get back above 5000/17000.
Intraday Tips
RELIANCE
Weekly Trend Decider 2117. Down side support are 1000 and 984, higher level resistance 1047-1051-1068 -1075 to be watch out.
TISCO
Weekly Trend Decider 5547.Strong reversal from the lower level 513... now consider support are 520-510 .... If up move continue it will test 572. Likely test 611.
SUZLON ENERGY
Weekly Trend Decider 72.... Contra Stocks... Consider support 66 as remain it will test 90 mark in short term.
BANK OF INDIA
Real strength show only above 395, otherwise first target are 350.
CIPLA
Negative divergence on the chart, sell stop loss 332 above target are 298-285.
DISH TV
Sell stop loss 43 and play for .......?
RIL INFRA
Real strength + Bull favour above 1200, otherwise you will see below 1000 mark.
IDBI
We are bearish below 131, ultimate target are double digit mark in coming days.
KFA
Up move is over.... And looks bearish, bull favour only above 56.50.. otherwise you will see in coming days.......
PUNJ LLOYD
Bearish set up - Stop loss for your selling at 217
• India Infoline Dec. Future (Rs. 129)
Buy only in the region 127-129 with a stop loss
below 124 for an intra-day target of 135.
• Lanco Infra. Dec. Future (Rs. 534)
Buy only in the region 530-534 with a stop loss
below 524 for an intra-day target of 547.
• GAIL (Rs. 412)
Buy only in the region 405-412 with a closing stop
loss below 385 for a short-term target of 450 and 484.
Nifty Future + Bank Nifty + CNX IT
Nifty Future : Strong volatile last week due to financial crises in Dubai resulted big sell off in world market including our market and tested a low of 4806, but lower level valuation again emerged and smart money was come into the market and resulted on itnra day basis strong recovery and resulted closed at 4941. We may consider in coming trading session it will face resistance 5000, on reversal selling opportunity, higher level resistance are 5150-5180 likely continue. Trade with cautious approach and hedge your position by way of call/put options in either side.
Friday high was 4960 and low 4801 but finally managed to closed at 4953 in premium against the spotclosed at 4941.
FO data indicate that some short covered at lower level, but again at higher level short created due to weakness.
Weekly trend decider are 4958 and real show only above that level and it will face resistance 5116-5180, thereafter sharp recovery can not be ruled out, down side support are 4789-4800-4631.
Today support are 4902-4890, below free fall and non stop target 4841,
If hold support 4902, it will test 5000 mark easily.
Bank Nifty : Trend is mixed and last week low was 8591, and strong bounce back and closed at 8900 above. Over all trend is still bullish sign but confirmation only above 9000 if hold with volume. Down side support 8543-8146, higher level resistance 9300-9700 range and should be watch out please. 8946.
CNX IT : Over all trend is still bullish as remain hold 5000 mark, higher it will face resistance are 5471-5670, down side support are 5121-4970. Weekly Trend Decider 5320.
Market(Sensex,Nifty) Predictions on 30-Nov-2009
NIFTY
Today support are 4900 and resistance are 4967-4971, crossover and sustained above, time being positive, down side below 4900, further weakness and it will test 4848. Weekly trend decider 4963.
BSE
Today : Friday low are very crucial 16200, and further weakness only below that level, which will come up to 16000, higher level resistance are 16830-16900-17000. Weekly trend decider 16691
Dow
Dow almost touched a target of 10495 . The short term trend is positive as remain 10000 level hold in coming trading sessions.
Weekly Trend Decider 2117. Down side support are 1000 and 984, higher level resistance 1047-1051-1068 -1075 to be watch out.
TISCO
Weekly Trend Decider 5547.Strong reversal from the lower level 513... now consider support are 520-510 .... If up move continue it will test 572. Likely test 611.
SUZLON ENERGY
Weekly Trend Decider 72.... Contra Stocks... Consider support 66 as remain it will test 90 mark in short term.
BANK OF INDIA
Real strength show only above 395, otherwise first target are 350.
CIPLA
Negative divergence on the chart, sell stop loss 332 above target are 298-285.
DISH TV
Sell stop loss 43 and play for .......?
RIL INFRA
Real strength + Bull favour above 1200, otherwise you will see below 1000 mark.
IDBI
We are bearish below 131, ultimate target are double digit mark in coming days.
KFA
Up move is over.... And looks bearish, bull favour only above 56.50.. otherwise you will see in coming days.......
PUNJ LLOYD
Bearish set up - Stop loss for your selling at 217
• India Infoline Dec. Future (Rs. 129)
Buy only in the region 127-129 with a stop loss
below 124 for an intra-day target of 135.
• Lanco Infra. Dec. Future (Rs. 534)
Buy only in the region 530-534 with a stop loss
below 524 for an intra-day target of 547.
• GAIL (Rs. 412)
Buy only in the region 405-412 with a closing stop
loss below 385 for a short-term target of 450 and 484.
Nifty Future + Bank Nifty + CNX IT
Nifty Future : Strong volatile last week due to financial crises in Dubai resulted big sell off in world market including our market and tested a low of 4806, but lower level valuation again emerged and smart money was come into the market and resulted on itnra day basis strong recovery and resulted closed at 4941. We may consider in coming trading session it will face resistance 5000, on reversal selling opportunity, higher level resistance are 5150-5180 likely continue. Trade with cautious approach and hedge your position by way of call/put options in either side.
Friday high was 4960 and low 4801 but finally managed to closed at 4953 in premium against the spotclosed at 4941.
FO data indicate that some short covered at lower level, but again at higher level short created due to weakness.
Weekly trend decider are 4958 and real show only above that level and it will face resistance 5116-5180, thereafter sharp recovery can not be ruled out, down side support are 4789-4800-4631.
Today support are 4902-4890, below free fall and non stop target 4841,
If hold support 4902, it will test 5000 mark easily.
Bank Nifty : Trend is mixed and last week low was 8591, and strong bounce back and closed at 8900 above. Over all trend is still bullish sign but confirmation only above 9000 if hold with volume. Down side support 8543-8146, higher level resistance 9300-9700 range and should be watch out please. 8946.
CNX IT : Over all trend is still bullish as remain hold 5000 mark, higher it will face resistance are 5471-5670, down side support are 5121-4970. Weekly Trend Decider 5320.
Market(Sensex,Nifty) Predictions on 30-Nov-2009
NIFTY
Today support are 4900 and resistance are 4967-4971, crossover and sustained above, time being positive, down side below 4900, further weakness and it will test 4848. Weekly trend decider 4963.
BSE
Today : Friday low are very crucial 16200, and further weakness only below that level, which will come up to 16000, higher level resistance are 16830-16900-17000. Weekly trend decider 16691
Dow
Dow almost touched a target of 10495 . The short term trend is positive as remain 10000 level hold in coming trading sessions.
Friday, November 27, 2009
Market New & Trends
HOT FROM THE PRESS
* RANBAXY : launches the generic version of Glaxo Smithkline's blockbuster drug
Valtrex (anti-herpes drug) in the US
* BANKS : Govt will provide Rs 50bn to public sector banks to beef up their
capital.. this will be in addition to the Rs160bn provided by World Bank
* TATA POWER : 2Q consolidated PAT Rs 3.68bn v/s 5.28bn, Rev Rs 45.8bn v/s 46.4b
* SIEMENS : Sep FY09 PAT Rs 7.05bn v/s 6bn, Rev Rs 92.86bn v/s 96.8bn.. board
meet on 30th Nov to consider merger of Siemens Healthcare
* VARUN SHIPPING : puts its fleet acquisition plans with capex of Rs 4.6bn in
FY10 on hold due to credit crisis and economic slowdown
* PRAKASH INDUSTRIES : plans RS 30bn expansion in power capacity in next 4 yrs
* IOCL : expected to invest Rs 46.50bn in new petroleum pipeline projects
* ONGC/OIL INDIA : ONGC Videsh and OINL exploring possibilities of bidding for
oil and gas fields in Iraq
* MCLEOD RUSSEL : in battle with Birla grp JayShree Tea for 4 tea gardens in
Uganda with combined productiojn capacity of 6mn kg a yr
* DLF : buyers invested in co's commercial office project in S Delhi demanding
refund alleging project delays & that co doesnt have approval for the same
* SUN PHARMA : receives tentative US FDA approval for its generic Strattera
capsules for treatment of attention deficit hyperactivity disorder
Corporate News – Industry trends
* MARKETS around the world including India found themselves
lashed on Thursday by fears of fresh financial trouble, this time with
its epicentre near home in Dubai, threatening to derail an incipient
global recovery and holding huge ramifications for India (ET)
* Bulk drug imports are set to be the next flashpoint between India
and China. The office of the Drugs Controller General of India has
roped in, for the first time in its history, the CBI to probe the alleged
import of “unregistered” bulk drugs from China (BS)
* Following reports that ITC could make a hostile bid to increase its
stake in EIH, which runs the Oberoi hotel chain, ITC Chairman Y C
Deveshwar said his company could even raise its stake to 25% in EIH
(BS)
* A move that will help Ranbaxy boost its revenues from the US in the
next six months, the company has launched the generic version of
GlaxoSmithKline’s blockbuster medicine Valtrex (valacyclovir
hydrochloride) in the US (BS)
* Telstra, the Australian communications major, is planning to re-enter
India’s telecommunications services space after several years, by
offering national (NLD) and international long distance (ILD) services.
It also plans to acquire an internet service provider (ISP) licence in
India (BS)
* Indian Oil Corporation, is planning to invest Rs 46.5bn in crude oil
and petroleum product pipelines over the next three years, Jitin
Prasada, minister of state for petroleum and natural gas, said in a
written reply to a question in Parliament (BS)
* Aiming to expand its portfolio in the executive segment motorcycles,
Bajaj Auto said it would launch Pulsar in the sub150 cc category early
next month. The company also said it expected to sell 1 mn units of
the Pulsar range of bikes in 2010, on the back of the yet-to-be
launched bike (BS)
* Tata Steel, for a consecutive quarter, has posted a consolidated net
loss, of Rs 27.1 bn for the quarter ended September, compared with a
net profit of Rs 47.0bn in the corresponding quarter last year.
Consolidated net sales during the period plunged to Rs 252.6bn from
the previous year’s Rs 440.5bn, down 42.6% (BS)
* Patni Computer Systems shares continue to be sold by members of
the promoter family; the family have sold shares accounting for a
stake of about 0.3% in the open market for a total value of Rs 17.6 bn
(BS)
* The state-owned oil exploration major ONGC is eyeing a 20-25% stake
in a giant Iranian gas field, even as it awaits Tehran’s nod for its plan
to develop a gas field it had discovered two years ago (BS)
* Citing steep rise in coal prices, the West Bengal State Electricity
Distribution Company Ltd, the largest electricity distribution
company in the state, has decided to hike its power tariff by 22%.
CESC Ltd, the other power distributor in the state, has also increased
its tariff by 12%. This is the second time this year that the tariffs have
been hiked (BS)
* Port and Dock workers’ unions call for a nationwide strike after
December 15 to protest at lack of wage revision may be averted, as
the port authorities have expressed willingness to hold talks before the
end of this month (BS)
* Indian corporate raised close to US$2 bn through FCCBs in October
— the highest since February 2007, riding on the back of an upswing in
stock prices in the local market (ET)
* Bharat Sanchar Nigam Ltd has received bids from five companies for
rolling out WiMax-based broadband services on a franchisee model
(BL)
Economic/Regulatory development
* The YoY inflation in food prices has shot up to 15.58% largely on
the back of potato prices which have more than doubled in the past
year. Prices of pulses and onions also rose by over 25% in the
wholesale market; the annual rate of inflation in the Primary Articles
group has risen to 11.04% during the week ended November 14,
higher than the previous week’s annual rise of 9.94% (BL)
* National Bank for Agriculture and Rural Development has
sanctioned loans worth Rs 2880 mn under the Rural Infrastructure
Development Fund (RIDF) (BL)
International trends
* China, the world’s biggest polluter, set its first target aimed at slowing
the growth of carbon dioxide emissions, less than two weeks before
global leaders meet to negotiate a new climate change treaty (BS)
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
* RANBAXY : launches the generic version of Glaxo Smithkline's blockbuster drug
Valtrex (anti-herpes drug) in the US
* BANKS : Govt will provide Rs 50bn to public sector banks to beef up their
capital.. this will be in addition to the Rs160bn provided by World Bank
* TATA POWER : 2Q consolidated PAT Rs 3.68bn v/s 5.28bn, Rev Rs 45.8bn v/s 46.4b
* SIEMENS : Sep FY09 PAT Rs 7.05bn v/s 6bn, Rev Rs 92.86bn v/s 96.8bn.. board
meet on 30th Nov to consider merger of Siemens Healthcare
* VARUN SHIPPING : puts its fleet acquisition plans with capex of Rs 4.6bn in
FY10 on hold due to credit crisis and economic slowdown
* PRAKASH INDUSTRIES : plans RS 30bn expansion in power capacity in next 4 yrs
* IOCL : expected to invest Rs 46.50bn in new petroleum pipeline projects
* ONGC/OIL INDIA : ONGC Videsh and OINL exploring possibilities of bidding for
oil and gas fields in Iraq
* MCLEOD RUSSEL : in battle with Birla grp JayShree Tea for 4 tea gardens in
Uganda with combined productiojn capacity of 6mn kg a yr
* DLF : buyers invested in co's commercial office project in S Delhi demanding
refund alleging project delays & that co doesnt have approval for the same
* SUN PHARMA : receives tentative US FDA approval for its generic Strattera
capsules for treatment of attention deficit hyperactivity disorder
Corporate News – Industry trends
* MARKETS around the world including India found themselves
lashed on Thursday by fears of fresh financial trouble, this time with
its epicentre near home in Dubai, threatening to derail an incipient
global recovery and holding huge ramifications for India (ET)
* Bulk drug imports are set to be the next flashpoint between India
and China. The office of the Drugs Controller General of India has
roped in, for the first time in its history, the CBI to probe the alleged
import of “unregistered” bulk drugs from China (BS)
* Following reports that ITC could make a hostile bid to increase its
stake in EIH, which runs the Oberoi hotel chain, ITC Chairman Y C
Deveshwar said his company could even raise its stake to 25% in EIH
(BS)
* A move that will help Ranbaxy boost its revenues from the US in the
next six months, the company has launched the generic version of
GlaxoSmithKline’s blockbuster medicine Valtrex (valacyclovir
hydrochloride) in the US (BS)
* Telstra, the Australian communications major, is planning to re-enter
India’s telecommunications services space after several years, by
offering national (NLD) and international long distance (ILD) services.
It also plans to acquire an internet service provider (ISP) licence in
India (BS)
* Indian Oil Corporation, is planning to invest Rs 46.5bn in crude oil
and petroleum product pipelines over the next three years, Jitin
Prasada, minister of state for petroleum and natural gas, said in a
written reply to a question in Parliament (BS)
* Aiming to expand its portfolio in the executive segment motorcycles,
Bajaj Auto said it would launch Pulsar in the sub150 cc category early
next month. The company also said it expected to sell 1 mn units of
the Pulsar range of bikes in 2010, on the back of the yet-to-be
launched bike (BS)
* Tata Steel, for a consecutive quarter, has posted a consolidated net
loss, of Rs 27.1 bn for the quarter ended September, compared with a
net profit of Rs 47.0bn in the corresponding quarter last year.
Consolidated net sales during the period plunged to Rs 252.6bn from
the previous year’s Rs 440.5bn, down 42.6% (BS)
* Patni Computer Systems shares continue to be sold by members of
the promoter family; the family have sold shares accounting for a
stake of about 0.3% in the open market for a total value of Rs 17.6 bn
(BS)
* The state-owned oil exploration major ONGC is eyeing a 20-25% stake
in a giant Iranian gas field, even as it awaits Tehran’s nod for its plan
to develop a gas field it had discovered two years ago (BS)
* Citing steep rise in coal prices, the West Bengal State Electricity
Distribution Company Ltd, the largest electricity distribution
company in the state, has decided to hike its power tariff by 22%.
CESC Ltd, the other power distributor in the state, has also increased
its tariff by 12%. This is the second time this year that the tariffs have
been hiked (BS)
* Port and Dock workers’ unions call for a nationwide strike after
December 15 to protest at lack of wage revision may be averted, as
the port authorities have expressed willingness to hold talks before the
end of this month (BS)
* Indian corporate raised close to US$2 bn through FCCBs in October
— the highest since February 2007, riding on the back of an upswing in
stock prices in the local market (ET)
* Bharat Sanchar Nigam Ltd has received bids from five companies for
rolling out WiMax-based broadband services on a franchisee model
(BL)
Economic/Regulatory development
* The YoY inflation in food prices has shot up to 15.58% largely on
the back of potato prices which have more than doubled in the past
year. Prices of pulses and onions also rose by over 25% in the
wholesale market; the annual rate of inflation in the Primary Articles
group has risen to 11.04% during the week ended November 14,
higher than the previous week’s annual rise of 9.94% (BL)
* National Bank for Agriculture and Rural Development has
sanctioned loans worth Rs 2880 mn under the Rural Infrastructure
Development Fund (RIDF) (BL)
International trends
* China, the world’s biggest polluter, set its first target aimed at slowing
the growth of carbon dioxide emissions, less than two weeks before
global leaders meet to negotiate a new climate change treaty (BS)
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
RANBAXY
RANBAXY
Looks very very hot......Our target are intact 450, but it must hold 400-410 level...
Ranbaxy launches GSK's blockbuster drug in US Ranbaxy has launched the generic version of Valtrex (Valacyclovir hydrochloride) in the US under 180-day exclusivity. Though market had an apprehension that whether
Ranbaxy will be able to monetize this opportunity or not because of ongoing issue at Devas from where this molecule was filed earlier. But company is able to manage the launch by getting it manufactured at its US facility. This molecule represents its first major first-to-file (FTF) opportunity since the Daiichi acquisition and its problems with US Food and Drug Administration last year for Paonta Sahib and Dewas Facility. Ranbaxy is likely to have revenue of US$180mn (Market size is approx. US$1.3bn) and PAT of US$118mn (assuming 30% price erosion, 40% market share and 65% profit margin) during the exclusivity period. During the period, Ranbaxy will be the
only company, other than the innovator GSK, to market the product in the US.
Impact on Ranbaxy The net NPV because of this launch is Rs11/ share. The total NPV of Para IV is Rs93/share. In terms of financial implication, we believe that the impact is already been factored in the prices. However, sentimentally it is very positive for the company. Ranbaxy also has another ParaIV opportunity for the generic version of Flomax (market size-Rs1.9bn; filed from Devas) which is going to be materialize in March ’10. We believe that company will be able to monetize this opportunity also. At CMP of Rs430, the stock is trading at 43x CY09 and 24.7x CY10 consensus earnings. Though we do not have formal coverage but we believe that stock is fairly valued
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Looks very very hot......Our target are intact 450, but it must hold 400-410 level...
Ranbaxy launches GSK's blockbuster drug in US Ranbaxy has launched the generic version of Valtrex (Valacyclovir hydrochloride) in the US under 180-day exclusivity. Though market had an apprehension that whether
Ranbaxy will be able to monetize this opportunity or not because of ongoing issue at Devas from where this molecule was filed earlier. But company is able to manage the launch by getting it manufactured at its US facility. This molecule represents its first major first-to-file (FTF) opportunity since the Daiichi acquisition and its problems with US Food and Drug Administration last year for Paonta Sahib and Dewas Facility. Ranbaxy is likely to have revenue of US$180mn (Market size is approx. US$1.3bn) and PAT of US$118mn (assuming 30% price erosion, 40% market share and 65% profit margin) during the exclusivity period. During the period, Ranbaxy will be the
only company, other than the innovator GSK, to market the product in the US.
Impact on Ranbaxy The net NPV because of this launch is Rs11/ share. The total NPV of Para IV is Rs93/share. In terms of financial implication, we believe that the impact is already been factored in the prices. However, sentimentally it is very positive for the company. Ranbaxy also has another ParaIV opportunity for the generic version of Flomax (market size-Rs1.9bn; filed from Devas) which is going to be materialize in March ’10. We believe that company will be able to monetize this opportunity also. At CMP of Rs430, the stock is trading at 43x CY09 and 24.7x CY10 consensus earnings. Though we do not have formal coverage but we believe that stock is fairly valued
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Market Technical View
Buying Opportunity
The Nifty lost 103 points over the day to close at 5005. A
corrective day at the markets yesterday as they opened gapdown
and thereafter kept making lower lows for the rest of the
trading session and closed above the psychological mark of
5000. The fall is not completely out-of-the-blue as the markets
have this ability to do strange things on an F&O expiry. A bearish
pattern was spotted on the hourly chart (See Exhibit 1 on Page
2) whose target of 4990 was done within a couple of hours. A
100-150 Nifty point sell-off can happen at any point of time and is
too little to be given importance given the extent of the recent
rise. The oscillators, which have been overbought, came up with
a sell trigger yesterday and are likely have a negative effect for
one more day. From a bigger picture perspective the fall is
temporary in nature and therefore is unlikely to sustain beyond a
few days. The level of 16600/4900 are the crucial supports to
watch out for. Overall, after the 2000-point rally in the last couple
of weeks the current decline can only be understood as a routine
retracement and hence provides a buying opportunity.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
The Nifty lost 103 points over the day to close at 5005. A
corrective day at the markets yesterday as they opened gapdown
and thereafter kept making lower lows for the rest of the
trading session and closed above the psychological mark of
5000. The fall is not completely out-of-the-blue as the markets
have this ability to do strange things on an F&O expiry. A bearish
pattern was spotted on the hourly chart (See Exhibit 1 on Page
2) whose target of 4990 was done within a couple of hours. A
100-150 Nifty point sell-off can happen at any point of time and is
too little to be given importance given the extent of the recent
rise. The oscillators, which have been overbought, came up with
a sell trigger yesterday and are likely have a negative effect for
one more day. From a bigger picture perspective the fall is
temporary in nature and therefore is unlikely to sustain beyond a
few days. The level of 16600/4900 are the crucial supports to
watch out for. Overall, after the 2000-point rally in the last couple
of weeks the current decline can only be understood as a routine
retracement and hence provides a buying opportunity.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Thursday, November 26, 2009
Intraday Tips
RELIANCE
Higher level resistance are 1080-1085, down side support to be watch out 1048-1032, below more down side. On panic to catch this stock for long term investors.
RELCAPITAL
Major hurdle of this counter are 840-850, successfully crossover think to buy side, down side support exit 800, thereafter.....
LT
Higher level resistance 1650, on reversal selling opportunity, support are 1610-1600 must be hold for bull move.
HDIL
Ultimate target are 291... any rise to selling opportunity.
SBI
Bull move only above 2350, otherwise sell.
RANBAXY
Looks very very hot......Our target are intact 450, but it must hold 400-410 level...
HINDALCO :On rise it will face multiple resistance like 142 to 145 range....
DLF
Decisively break 350, another round of down side.
TISCO
Panic to be watch out 520, whether hold or not, otherwise .....?
• Kotak Bank Dec. Future (Rs. 781)
Buy only on a move above 787 with a stop loss
below 779 for an intra-day target of 803.
Nifty Future + Bank Nifty + CNX IT
Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.
As expected on yesterday, heavy profit booking were saw and finally closed at 4980 which is discount against the Novemember series indicate major short sell have been created in December series as well as most of the roll over were the short side.
Yesterday High was 5108 and finally broken support level and tested
Low 4978, finally managed to close at 4980 which indicate a lot of
Long have squared off and short was rolled over in the next series.
Nifty roll over 71% against the market roll over 80%.
FIIs are net buyers of more than 280 crores.
Today hurdle are .........5040, 5051
Down side support 4975, below immediate target 4944-4920-4901
Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to November indicating good carry over and bullish sign . Decisively break 9000 further weakness.
CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.
NIFTY
Over all trend is up and it high of 5079 with extremely volatile. We may expected that the strong support are 4740, as long as hold possible target are higher level 5150-5180-5300 or above. We advise to readers, any decline or panic should be accumulate and excellent buying opportunity. Over all in the Indian market, global cues would be play a important role, as far as the sentiment is concerned, some economic data is also due in the coming week which is watch out.
Today resistance are 5040-5050, down side support are 4980,below it will take support 4968-4950-4928, thereafter more down side can not be ruled out. Weekly trend decider 5021.
BSE
BSE: Short term trend of the Market are remain positive as hold 16000 level, but higher level it will face strong resistance 17400-17500, successfully crossover and closed above another bull move which may go beyond 18500-19000. Long term trend are still good and we expect in 2010 it will test new high.
Today : Higher level resistance zone 17000-17100, real strength show only above that level, down side below 16808, immediate target are 16650-16610.Weekly trend decider 16918.
Dow : Last week Dow recorded a fresh move and almost tested new high of 10438 which is almost achieved . As remain up trend, next intermediate target likely 11000-11300-11500 in near term. On the other hand we consider support 10000 and major support are 9500, below deeper correction can not be ruled out.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Higher level resistance are 1080-1085, down side support to be watch out 1048-1032, below more down side. On panic to catch this stock for long term investors.
RELCAPITAL
Major hurdle of this counter are 840-850, successfully crossover think to buy side, down side support exit 800, thereafter.....
LT
Higher level resistance 1650, on reversal selling opportunity, support are 1610-1600 must be hold for bull move.
HDIL
Ultimate target are 291... any rise to selling opportunity.
SBI
Bull move only above 2350, otherwise sell.
RANBAXY
Looks very very hot......Our target are intact 450, but it must hold 400-410 level...
HINDALCO :On rise it will face multiple resistance like 142 to 145 range....
DLF
Decisively break 350, another round of down side.
TISCO
Panic to be watch out 520, whether hold or not, otherwise .....?
• Kotak Bank Dec. Future (Rs. 781)
Buy only on a move above 787 with a stop loss
below 779 for an intra-day target of 803.
Nifty Future + Bank Nifty + CNX IT
Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.
As expected on yesterday, heavy profit booking were saw and finally closed at 4980 which is discount against the Novemember series indicate major short sell have been created in December series as well as most of the roll over were the short side.
Yesterday High was 5108 and finally broken support level and tested
Low 4978, finally managed to close at 4980 which indicate a lot of
Long have squared off and short was rolled over in the next series.
Nifty roll over 71% against the market roll over 80%.
FIIs are net buyers of more than 280 crores.
Today hurdle are .........5040, 5051
Down side support 4975, below immediate target 4944-4920-4901
Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to November indicating good carry over and bullish sign . Decisively break 9000 further weakness.
CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.
NIFTY
Over all trend is up and it high of 5079 with extremely volatile. We may expected that the strong support are 4740, as long as hold possible target are higher level 5150-5180-5300 or above. We advise to readers, any decline or panic should be accumulate and excellent buying opportunity. Over all in the Indian market, global cues would be play a important role, as far as the sentiment is concerned, some economic data is also due in the coming week which is watch out.
Today resistance are 5040-5050, down side support are 4980,below it will take support 4968-4950-4928, thereafter more down side can not be ruled out. Weekly trend decider 5021.
BSE
BSE: Short term trend of the Market are remain positive as hold 16000 level, but higher level it will face strong resistance 17400-17500, successfully crossover and closed above another bull move which may go beyond 18500-19000. Long term trend are still good and we expect in 2010 it will test new high.
Today : Higher level resistance zone 17000-17100, real strength show only above that level, down side below 16808, immediate target are 16650-16610.Weekly trend decider 16918.
Dow : Last week Dow recorded a fresh move and almost tested new high of 10438 which is almost achieved . As remain up trend, next intermediate target likely 11000-11300-11500 in near term. On the other hand we consider support 10000 and major support are 9500, below deeper correction can not be ruled out.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Market News & Trends
HOT FROM THE PRESS
* BANKS : Dy Governor says its not the right time for consolidation in the
banking industry as we have very few dominant players & consolidation will
further enhance the problem.. while another rpts states Govt has asked the
top 5 PSU Banks to come up with detailed roadmap on banking consolidation by
the end of current fiscal.. separately govt plans to move a bill early next
year to allow foreign investors in pvt banks to hv voting rights in proportion
to their share holding
* BANKING : RBI extends deadline for increasing provision coverage for NPAs to
70% from Sept 2010 to March 2011
* IDBI BK : Chmn says identified 2 lenders as potential targets for acquisition
* SBI : MD says loan offtake poor.. only retail sector witnessing a pick-up
* ONGC : CMD says to discuss "specific opportunities" with National Iranian
Oil Co next week.. to refinance $1bn debt raised for Imperial acquisition
* PANTALOON RETAIL : FII holding in the Co falls below the max 24% limit..
fresh purchases allowed after prior RBI approval or via FII blocks
* WIPRO : seeing a rise in demand in financial services segment and expects to
sustain overall opeating margins in near term
* INFOSYS : focussing on small acquisitions to boost growth.. mgt says does not
expect pxing to improve in near term.. separately to hire 20k in FY11
* HINDUSTAN LEVER : research firm Neilsen's Oct data shows co has arrested fall
in value market share in 3 categories ie soaps, washing poweder & skin cream
* GODREJ CONSUMER/MARICO : media reports cos have bid for a £250mn British
brand "Simple" one of the largest beauty product brands in UK
* IRB INFRA : board approves raising Rs 12bn from mkts
* LANCO INFRA : to acheive financial closure for atleast 3 major coal fired
power projects entailing total investments of over Rs 150bn
* INFOTECH ENTERPRISE : annd wud acquire cos in US or Europe in FY10 for ~$40mn
* EI HOTELS : ITC which owns a 14.98% stk in the co, says exploring several
options, incl increasing its stake to 25%
Corporate News – Industry trends
* The Department of Economic Affairs, the Ministry of Commerce
and Industry and the RBI have come to a consensus that FII in a
company should be monitored on a monthly or a quarterly basis to
ensure there is no breach of sectoral caps under the proposed FDI
guidelines (BS)
* Cigarettes-to-hospitality group ITC is reviewing its approach on
equity in EIH, which runs the Oberoi chain of hotels. ITC has a 14.98%
stake in EIH (BS)
* Pipe manufacturer Welspun Gujarat Stahl Rohren said it had raised
US$250 mn by way of institutional placement of shares and bonds
issue (BS)
* Suzlon Energy, has bagged a 42-Mw repeat order from Infigen
Energy, the largest wind energy player in Australia. Suzlon will supply
20 units of S88 - 2.1 Mw wind turbine generators that will be installed
at one of the wind farms in Infigen’s pipeline of future projects in New
South Wales (BS)
* Sugar maker Balrampur Chini Mills said its net profit surged nearly
threefold to Rs 427mn in the quarter ended September 30. Total
income on a standalone basis declined to Rs 3799mn in the latest
quarter from Rs 4167mn in the same period last fiscal (BS)
* The Cellular Operators Association of India (COAI) has asked the
DOT to take a final decision on 2G policies and review conditions for
licence before inviting applications for 3G (BS)
* Oman Oil Company has paid a full 50% premium for a re-entry into
the Rs 113.9bn Bina Refinery project of the state-run Bharat Petroleum
Corporation (BS)
* Tata Communications has signed an agreement with the Qatarbased
Qtel for a new undersea cable network that will connect a
number of regional operators in the Gulf region with the country (BS)
* Infotech Enterprises, a Hyderabad-based engineering and
geographic information services provider, is planning to acquire two
companies in the US by the end of this financial year (BS)
* In the face of alleged multi crore rupee kickback, which is being probed
by CBI, the government is considering cancelling power PSU NTPC’s
Rs 20bn contract with a Russian equipment firm (BS)
* Salesforce.com, the US$1-bn provider of customer relationship
management products, has entered into a multi-year partnership with
Wipro Infotech to market its products in India (ET)
* Former Maruti chief Jagdish Khattar-owned Carnation Auto has raised
Rs 1700 mn loan from Punjab National Bank to fund its expansion
programme (ET)
* The US-based 3Com Corporation has entered into an agreement
with Tata Consultancy Services to build the Andhra Pradesh State Wide
Area Network project that the latter bagged. 3Com would provide
enterprise switching, routing and security solutions for the project
aimed at connecting all the 23 district offices in the State (BL)
* Bajaj Hindustan said its board approved expansion of power
generation capacity of 400 MW to 830 MW (Mint)
Economic/Regulatory development
* The Reserve Bank of India may give banks a breather by extending
the deadline for increasing the provision coverage for non-performing
assets (NPAs) to 70% from September 2010 to March 2011 (BL)
* Domestic crude oil output continued with its declining trend in
October, with production dropping by 2.2% against the same month
last year. Natural gas production remained robust registering a 44.2%
increase YoY (BL)
* Sugar mills in Uttar Pradesh have offered higher prices to growers,
raising hopes that protesting farmers would start selling cane (Mint)
International trends
* General Motors Co doesn’t expect to find new bidders for Saab and
may shut the bankrupt unit after Koenigsegg Group AB cancelled a
planned acquisition, people familiar with the matter said.
* France Telecom SA, Europe’s third largest phone company, agreed to
merge its Swiss unit with that of Denmark’s TDC A/S, paying 1.5 bn
euros for control of the combined entity; France Telecom will own 75%
of the company formed by the merger of its Orange Switzerland unit
with TDC’s Sunrise Communications SA, and has an option to buy the
rest for about 1.2 bn euros, the Paris-based operator said (BS)
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
* BANKS : Dy Governor says its not the right time for consolidation in the
banking industry as we have very few dominant players & consolidation will
further enhance the problem.. while another rpts states Govt has asked the
top 5 PSU Banks to come up with detailed roadmap on banking consolidation by
the end of current fiscal.. separately govt plans to move a bill early next
year to allow foreign investors in pvt banks to hv voting rights in proportion
to their share holding
* BANKING : RBI extends deadline for increasing provision coverage for NPAs to
70% from Sept 2010 to March 2011
* IDBI BK : Chmn says identified 2 lenders as potential targets for acquisition
* SBI : MD says loan offtake poor.. only retail sector witnessing a pick-up
* ONGC : CMD says to discuss "specific opportunities" with National Iranian
Oil Co next week.. to refinance $1bn debt raised for Imperial acquisition
* PANTALOON RETAIL : FII holding in the Co falls below the max 24% limit..
fresh purchases allowed after prior RBI approval or via FII blocks
* WIPRO : seeing a rise in demand in financial services segment and expects to
sustain overall opeating margins in near term
* INFOSYS : focussing on small acquisitions to boost growth.. mgt says does not
expect pxing to improve in near term.. separately to hire 20k in FY11
* HINDUSTAN LEVER : research firm Neilsen's Oct data shows co has arrested fall
in value market share in 3 categories ie soaps, washing poweder & skin cream
* GODREJ CONSUMER/MARICO : media reports cos have bid for a £250mn British
brand "Simple" one of the largest beauty product brands in UK
* IRB INFRA : board approves raising Rs 12bn from mkts
* LANCO INFRA : to acheive financial closure for atleast 3 major coal fired
power projects entailing total investments of over Rs 150bn
* INFOTECH ENTERPRISE : annd wud acquire cos in US or Europe in FY10 for ~$40mn
* EI HOTELS : ITC which owns a 14.98% stk in the co, says exploring several
options, incl increasing its stake to 25%
Corporate News – Industry trends
* The Department of Economic Affairs, the Ministry of Commerce
and Industry and the RBI have come to a consensus that FII in a
company should be monitored on a monthly or a quarterly basis to
ensure there is no breach of sectoral caps under the proposed FDI
guidelines (BS)
* Cigarettes-to-hospitality group ITC is reviewing its approach on
equity in EIH, which runs the Oberoi chain of hotels. ITC has a 14.98%
stake in EIH (BS)
* Pipe manufacturer Welspun Gujarat Stahl Rohren said it had raised
US$250 mn by way of institutional placement of shares and bonds
issue (BS)
* Suzlon Energy, has bagged a 42-Mw repeat order from Infigen
Energy, the largest wind energy player in Australia. Suzlon will supply
20 units of S88 - 2.1 Mw wind turbine generators that will be installed
at one of the wind farms in Infigen’s pipeline of future projects in New
South Wales (BS)
* Sugar maker Balrampur Chini Mills said its net profit surged nearly
threefold to Rs 427mn in the quarter ended September 30. Total
income on a standalone basis declined to Rs 3799mn in the latest
quarter from Rs 4167mn in the same period last fiscal (BS)
* The Cellular Operators Association of India (COAI) has asked the
DOT to take a final decision on 2G policies and review conditions for
licence before inviting applications for 3G (BS)
* Oman Oil Company has paid a full 50% premium for a re-entry into
the Rs 113.9bn Bina Refinery project of the state-run Bharat Petroleum
Corporation (BS)
* Tata Communications has signed an agreement with the Qatarbased
Qtel for a new undersea cable network that will connect a
number of regional operators in the Gulf region with the country (BS)
* Infotech Enterprises, a Hyderabad-based engineering and
geographic information services provider, is planning to acquire two
companies in the US by the end of this financial year (BS)
* In the face of alleged multi crore rupee kickback, which is being probed
by CBI, the government is considering cancelling power PSU NTPC’s
Rs 20bn contract with a Russian equipment firm (BS)
* Salesforce.com, the US$1-bn provider of customer relationship
management products, has entered into a multi-year partnership with
Wipro Infotech to market its products in India (ET)
* Former Maruti chief Jagdish Khattar-owned Carnation Auto has raised
Rs 1700 mn loan from Punjab National Bank to fund its expansion
programme (ET)
* The US-based 3Com Corporation has entered into an agreement
with Tata Consultancy Services to build the Andhra Pradesh State Wide
Area Network project that the latter bagged. 3Com would provide
enterprise switching, routing and security solutions for the project
aimed at connecting all the 23 district offices in the State (BL)
* Bajaj Hindustan said its board approved expansion of power
generation capacity of 400 MW to 830 MW (Mint)
Economic/Regulatory development
* The Reserve Bank of India may give banks a breather by extending
the deadline for increasing the provision coverage for non-performing
assets (NPAs) to 70% from September 2010 to March 2011 (BL)
* Domestic crude oil output continued with its declining trend in
October, with production dropping by 2.2% against the same month
last year. Natural gas production remained robust registering a 44.2%
increase YoY (BL)
* Sugar mills in Uttar Pradesh have offered higher prices to growers,
raising hopes that protesting farmers would start selling cane (Mint)
International trends
* General Motors Co doesn’t expect to find new bidders for Saab and
may shut the bankrupt unit after Koenigsegg Group AB cancelled a
planned acquisition, people familiar with the matter said.
* France Telecom SA, Europe’s third largest phone company, agreed to
merge its Swiss unit with that of Denmark’s TDC A/S, paying 1.5 bn
euros for control of the combined entity; France Telecom will own 75%
of the company formed by the merger of its Orange Switzerland unit
with TDC’s Sunrise Communications SA, and has an option to buy the
rest for about 1.2 bn euros, the Paris-based operator said (BS)
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Hold GAIL
GAIL
Hold
Price: Rs421 Target Price (Mar 11): Rs382
Priced for stable tariff
* Tariff concerns reducing…: We reiterate our view that the new
regulations are unlikely to substantially reduce the tariff charged by GAIL.
The new regulations offer a 12% RoCE tariff based on a project IRR
method with life of asset at 25 years. For existing pipelines, the Capital
Employed is based on net block and life of asset is based on the residual
life (25 years – the number of years completed). While GAIL management
has recently stated that the tariffs can actually increase by about 10%
based on the new regulations, we factor in a reduction of about 10%.
* And projects on track…: Most of the proposed projects of the company
are on track. The first phase of upgraded capacity of HBJ pipeline is likely
to go onstream shortly, while the entire upgradation (in three phases)
would be completed by the end of next calendar year. The capex is integral
not only to the volume growth assumptions in our calculations but also the
tariff as outlined above. Hence any significant delays in capex can impact
the tariff calculations, particularly on HBJ.
* Petrochemical capacity expansion is also on schedule and the first phase of
debottlenecking of the existing capacity from 0.41 MMTPA to 0.5 MMTPA
would be ready by August 2010.
* Subsidy issue continues to haunt: Government of India has stated that
LPG and Kerosene subsidy would be borne by Central Government, while
auto-fuel subsidy would be borne by Upstream companies. Now that LPG
and Kerosene subsidy is to be borne by Government, there is no rationale
on GAIL bearing the subsidy. However, during the first two quarters of the
current year, GAIL continued to bear a part of the subsidy and an increase
in the subsidy continues to threaten and impact GAILs valuations.
* Maintain Hold: As stated above, we believe that HBJ pipeline tariffs are
unlikely to decline significantly. Further, over the next one year, GAIL is
likely to benefit from the increased availability of gas and the completion of
the projects. However, the recent sharp run-up in the price captures both
these upsides. Further, any sharp increase in subsidy due to higher crude
price could significantly impact valuations. Hence, we retain hold and
revise the target price to Rs. 382 from Rs. 371.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Hold
Price: Rs421 Target Price (Mar 11): Rs382
Priced for stable tariff
* Tariff concerns reducing…: We reiterate our view that the new
regulations are unlikely to substantially reduce the tariff charged by GAIL.
The new regulations offer a 12% RoCE tariff based on a project IRR
method with life of asset at 25 years. For existing pipelines, the Capital
Employed is based on net block and life of asset is based on the residual
life (25 years – the number of years completed). While GAIL management
has recently stated that the tariffs can actually increase by about 10%
based on the new regulations, we factor in a reduction of about 10%.
* And projects on track…: Most of the proposed projects of the company
are on track. The first phase of upgraded capacity of HBJ pipeline is likely
to go onstream shortly, while the entire upgradation (in three phases)
would be completed by the end of next calendar year. The capex is integral
not only to the volume growth assumptions in our calculations but also the
tariff as outlined above. Hence any significant delays in capex can impact
the tariff calculations, particularly on HBJ.
* Petrochemical capacity expansion is also on schedule and the first phase of
debottlenecking of the existing capacity from 0.41 MMTPA to 0.5 MMTPA
would be ready by August 2010.
* Subsidy issue continues to haunt: Government of India has stated that
LPG and Kerosene subsidy would be borne by Central Government, while
auto-fuel subsidy would be borne by Upstream companies. Now that LPG
and Kerosene subsidy is to be borne by Government, there is no rationale
on GAIL bearing the subsidy. However, during the first two quarters of the
current year, GAIL continued to bear a part of the subsidy and an increase
in the subsidy continues to threaten and impact GAILs valuations.
* Maintain Hold: As stated above, we believe that HBJ pipeline tariffs are
unlikely to decline significantly. Further, over the next one year, GAIL is
likely to benefit from the increased availability of gas and the completion of
the projects. However, the recent sharp run-up in the price captures both
these upsides. Further, any sharp increase in subsidy due to higher crude
price could significantly impact valuations. Hence, we retain hold and
revise the target price to Rs. 382 from Rs. 371.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Buy Dabur India
Dabur India
Buy
Price: Rs165 Target Price (Dec-10): Rs177
Focused efforts to stay on the growth path
Having all the while maintained that there is no evident slowdown in
consumption trends, Dabur India continues to remain confident of its
ability to sustain the strong growth momentum going forward (c.19-
20%). This is despite having a fairly strong base to contend with
(20% sales growth in 2HF09 vs 17% in 1H). Our recent management
interaction seems to suggest that the final verdict on monsoon-led
weakness appears to be out: consumption remains reasonably strong
as delayed revival of rains helped cap the damage to one crop-cycle
only. Also, personal care is likely to escape the downtrading
phenomenon witnessed in laundry due to higher brand-stickiness in
the category. Meanwhile, Dabur’s volume growth profile (10%-region
over past several quarters) helps provide a distinct source of comfort.
* Focused efforts to stay on the growth path: Dabur continues to stay
focused on its high growth categories, viz. hair care, baby & skin care and
foods. While new launches & re-launches provide significant impetus to
urban growth, it continues to invest for rural consumers through focused
marketing efforts & introduction of more low-unit packs at attractive pricepoints
across its portfolio of products to increase rural penetration.
?? Skin care a key focus area: Skin care remains a key focus area within
the overall thrust in personal and health care segments. As per
management, skin care offers a more attractive market opportunity vis-Ã vis
foods & beverages and home care. Important drivers in this aspect are
the Fem Care acquisition (largely integrated with the company by now)
and recent new launches in this space. Recent launches include: (a) new
skin care brand U-veda with product offerings like fairness cream, face
wash, moisturizer etc, (b) herbal bleach under the Fem brand. Dabur
currently derives c.3-4% of its domestic sales from new launches.
* Fem care integration: Fem-care distribution network integration
underway with small towns & modern trade channels being merged with
Dabur’s larger CCD network. We expect the integration to yield synergy
benefits for the company, as witnessed for Foods. Fem will also be merged
into the main company with retrospective effect from Apr-09. In its first
full quarter of consolidation with Dabur India, Fem is estimated to have
contributed c.50bps to the combined entity’s gross margin on account of a
higher inherent margin profile of the Fem products. This, in our view,
augurs well for the longer term.
* Other key takeaways:
On the fiscal side, Dabur has been investing in new plants to take
advantage of duty & tax breaks; two new facilities are expected to get
operational by Mar-10 which will allow the company to enjoy tax
breaks for 10 years thereon. It is widely expected that GST (Goods &
Services Tax), when implemented, will not disadvantage the company
in terms of the exemption enjoyed by it in its current & upcoming
excise-free facilities.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Buy
Price: Rs165 Target Price (Dec-10): Rs177
Focused efforts to stay on the growth path
Having all the while maintained that there is no evident slowdown in
consumption trends, Dabur India continues to remain confident of its
ability to sustain the strong growth momentum going forward (c.19-
20%). This is despite having a fairly strong base to contend with
(20% sales growth in 2HF09 vs 17% in 1H). Our recent management
interaction seems to suggest that the final verdict on monsoon-led
weakness appears to be out: consumption remains reasonably strong
as delayed revival of rains helped cap the damage to one crop-cycle
only. Also, personal care is likely to escape the downtrading
phenomenon witnessed in laundry due to higher brand-stickiness in
the category. Meanwhile, Dabur’s volume growth profile (10%-region
over past several quarters) helps provide a distinct source of comfort.
* Focused efforts to stay on the growth path: Dabur continues to stay
focused on its high growth categories, viz. hair care, baby & skin care and
foods. While new launches & re-launches provide significant impetus to
urban growth, it continues to invest for rural consumers through focused
marketing efforts & introduction of more low-unit packs at attractive pricepoints
across its portfolio of products to increase rural penetration.
?? Skin care a key focus area: Skin care remains a key focus area within
the overall thrust in personal and health care segments. As per
management, skin care offers a more attractive market opportunity vis-Ã vis
foods & beverages and home care. Important drivers in this aspect are
the Fem Care acquisition (largely integrated with the company by now)
and recent new launches in this space. Recent launches include: (a) new
skin care brand U-veda with product offerings like fairness cream, face
wash, moisturizer etc, (b) herbal bleach under the Fem brand. Dabur
currently derives c.3-4% of its domestic sales from new launches.
* Fem care integration: Fem-care distribution network integration
underway with small towns & modern trade channels being merged with
Dabur’s larger CCD network. We expect the integration to yield synergy
benefits for the company, as witnessed for Foods. Fem will also be merged
into the main company with retrospective effect from Apr-09. In its first
full quarter of consolidation with Dabur India, Fem is estimated to have
contributed c.50bps to the combined entity’s gross margin on account of a
higher inherent margin profile of the Fem products. This, in our view,
augurs well for the longer term.
* Other key takeaways:
On the fiscal side, Dabur has been investing in new plants to take
advantage of duty & tax breaks; two new facilities are expected to get
operational by Mar-10 which will allow the company to enjoy tax
breaks for 10 years thereon. It is widely expected that GST (Goods &
Services Tax), when implemented, will not disadvantage the company
in terms of the exemption enjoyed by it in its current & upcoming
excise-free facilities.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Market Technical View
Volatile Yet Positive
The Nifty gained 18 points over the day to close at 5108. A day
of minor gains for the indices yesterday as they started off on a
flat note but rallied extremely well in the first half only to retrace
some of the gains in the second half. The encouraging aspect of
the trading session was the fact that the indices once again
made a “higher high”, which tells us that the momentum is intact.
The markets are gradually turning overbought but before we
witness an effect of the same a “last push” rally to the recent
highs is likely. We do not have any immediate bearish triggers on
the studies and hence holding on to long positions is still
advisable. The DM/ADX indicator is close to hitting a historic low
reading, which means that the study is readying itself for an
important buy trigger that supports our MT target of 5550. The
RSI indicator is yet to move into the overbought zone while
based on Elliot studies the Sensex gets support around the
17100 mark. The Mid-cap sector is likely to make a strong
comeback in the near term. Overall, the uptrend remains intact
and hence an attempt at 5170-5180 is likely in the near term.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
The Nifty gained 18 points over the day to close at 5108. A day
of minor gains for the indices yesterday as they started off on a
flat note but rallied extremely well in the first half only to retrace
some of the gains in the second half. The encouraging aspect of
the trading session was the fact that the indices once again
made a “higher high”, which tells us that the momentum is intact.
The markets are gradually turning overbought but before we
witness an effect of the same a “last push” rally to the recent
highs is likely. We do not have any immediate bearish triggers on
the studies and hence holding on to long positions is still
advisable. The DM/ADX indicator is close to hitting a historic low
reading, which means that the study is readying itself for an
important buy trigger that supports our MT target of 5550. The
RSI indicator is yet to move into the overbought zone while
based on Elliot studies the Sensex gets support around the
17100 mark. The Mid-cap sector is likely to make a strong
comeback in the near term. Overall, the uptrend remains intact
and hence an attempt at 5170-5180 is likely in the near term.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
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Intraday Tips
TATA POWER:
Weekly Trend Decider 1327. Trading range are 1300-1350, break and crossover in either side ... above 1350 close eye.... And sharp move.....target 1380-1400.
RELIANCE:
Weekly Trend Decider 2117 . Today going to Ex Bonus.... We may consider support are 1000 and advise to invest in this stock at current level or some decline and hold next 12 to 24 months target are 2000 +.
DLF :Weekly Trend Decider 373. Higher level resistance 385-390,below weakness continue and down side target are 350 or below..... Today resistance are 375....
BALRAMPURCHINI
Weekly Trend Decider 137.Strong reversal from the lower level... higher level resistance are 135, and support are 130. Down side major support 120 and it should not break under any circumstances.
SBI:
Weekly Trend Decider 2316. Big move on the card, with consider support are 2300-2270 range... and buying opportunity.
AXIS BANK:
Weekly Trend Decider 990. Today support 980 and resistance are 1028.... Thereafter do not remain short. Today catch it.....
ITC :
Keep a stop loss 260 and play for long side target 290 +
GSPL :
Above 90, non stop target are 100-105 mark and play for long side.
• Bank Of India Nov. Future (Rs. 393)
Buy only on a move above 394 with a stop loss
below 389 for an intra-day target of 404.
• Axis Bank Nov. Future (Rs. 1018)
Buy only on a move above 1018 with a stop loss
below 1004 for an intra-day target of 1038.
Nifty Future + Bank Nifty + CNX IT:
Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.
Yesterday on intrad day high was 5138, due to short covering
But some selling pressure emerged at mid session and tested low 5078
But finally closed at 5111.....
Nifty rolled total 64% in next series.
Today hurdle are 5145, crossover think only show power.
Thereafter it will test 5174-5190.,
Down side support are exit 5090,below immediate target 5060,
Then over all selling pressure will be emerged which will take
Up to 5000 near where as strong buying force come in the market.
Over all Nifty are in a trading range with low volume,
We advise to traders, best way to avoid today due to FO expiry.
Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to November indicating good carry over and bullish sign .
CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.
NIFTY :
Over all trend is up and it high of 5079 with extremely volatile. We may expected that the strong support are 4740, as long as hold possible target are higher level 5150-5180-5300 or above. We advise to readers, any decline or panic should be accumulate and excellent buying opportunity. Over all in the Indian market, global cues would be play a important role, as far as the sentiment is concerned, some economic data is also due in the coming week which is watch out.
Today support are 5080, below it will come down up to 5050, higher level resistance are 5140, 5150-5180 expected. Weekly trend decider 5021.
BSE:
BSE: Short term trend of the Market are remain positive as hold 16000 level, but higher level it will face strong resistance 17400-17500, successfully crossover and closed above another bull move which may go beyond 18500-19000. Long term trend are still good and we expect in 2010 it will test new high.
Today : As remain 17000, bull move and target are 17400-17500 target.Weekly trend decider 16918.
Dow : Last week Dow recorded a fresh move and almost tested new high of 10438 which is almost achieved . As remain up trend, next intermediate target likely 11000-11300-11500 in near term. On the other hand we consider support 10000 and major support are 9500, below deeper correction can not be ruled out.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Weekly Trend Decider 1327. Trading range are 1300-1350, break and crossover in either side ... above 1350 close eye.... And sharp move.....target 1380-1400.
RELIANCE:
Weekly Trend Decider 2117 . Today going to Ex Bonus.... We may consider support are 1000 and advise to invest in this stock at current level or some decline and hold next 12 to 24 months target are 2000 +.
DLF :Weekly Trend Decider 373. Higher level resistance 385-390,below weakness continue and down side target are 350 or below..... Today resistance are 375....
BALRAMPURCHINI
Weekly Trend Decider 137.Strong reversal from the lower level... higher level resistance are 135, and support are 130. Down side major support 120 and it should not break under any circumstances.
SBI:
Weekly Trend Decider 2316. Big move on the card, with consider support are 2300-2270 range... and buying opportunity.
AXIS BANK:
Weekly Trend Decider 990. Today support 980 and resistance are 1028.... Thereafter do not remain short. Today catch it.....
ITC :
Keep a stop loss 260 and play for long side target 290 +
GSPL :
Above 90, non stop target are 100-105 mark and play for long side.
• Bank Of India Nov. Future (Rs. 393)
Buy only on a move above 394 with a stop loss
below 389 for an intra-day target of 404.
• Axis Bank Nov. Future (Rs. 1018)
Buy only on a move above 1018 with a stop loss
below 1004 for an intra-day target of 1038.
Nifty Future + Bank Nifty + CNX IT:
Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.
Yesterday on intrad day high was 5138, due to short covering
But some selling pressure emerged at mid session and tested low 5078
But finally closed at 5111.....
Nifty rolled total 64% in next series.
Today hurdle are 5145, crossover think only show power.
Thereafter it will test 5174-5190.,
Down side support are exit 5090,below immediate target 5060,
Then over all selling pressure will be emerged which will take
Up to 5000 near where as strong buying force come in the market.
Over all Nifty are in a trading range with low volume,
We advise to traders, best way to avoid today due to FO expiry.
Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to November indicating good carry over and bullish sign .
CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.
NIFTY :
Over all trend is up and it high of 5079 with extremely volatile. We may expected that the strong support are 4740, as long as hold possible target are higher level 5150-5180-5300 or above. We advise to readers, any decline or panic should be accumulate and excellent buying opportunity. Over all in the Indian market, global cues would be play a important role, as far as the sentiment is concerned, some economic data is also due in the coming week which is watch out.
Today support are 5080, below it will come down up to 5050, higher level resistance are 5140, 5150-5180 expected. Weekly trend decider 5021.
BSE:
BSE: Short term trend of the Market are remain positive as hold 16000 level, but higher level it will face strong resistance 17400-17500, successfully crossover and closed above another bull move which may go beyond 18500-19000. Long term trend are still good and we expect in 2010 it will test new high.
Today : As remain 17000, bull move and target are 17400-17500 target.Weekly trend decider 16918.
Dow : Last week Dow recorded a fresh move and almost tested new high of 10438 which is almost achieved . As remain up trend, next intermediate target likely 11000-11300-11500 in near term. On the other hand we consider support 10000 and major support are 9500, below deeper correction can not be ruled out.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Wednesday, November 25, 2009
Sell Tata Communications
Tata Communications
SELL
Price: Rs375 Target Price: Under Review
2QFY10 margins, net profit disappoint
* 2QFY10 consolidated revenues in-line; margins, PAT disappoint:
For 2QFY10, TCOM posted consolidated revenues, EBITDA and net loss of
Rs27.2 bn (up 6.2% qoq), Rs3.3 bn (down 8% qoq) and Rs1.56 bn (vs.
net loss of Rs551 mn in 1QFY10) respectively. At 12.1%, 2QFY10 EBITDA
margin was 240 bps below our estimate – the gap in EBITDA together with
lower-than expected non-operating income led to 2QFY10 net loss being
significantly exaggerated vs. our estimate (Rs580 mn).
* Margin decline attributed to qoq stagnation in non-voice revenues:
A mere 1.6% qoq rise in non-voice revenues suggests pricing pressure in
enterprise/carrier data business, albeit not as severe as in the domestic
market considering that stand-alone 2QFy10 non-voice revenues declined
8.6% qoq. As voice revenues, which entail significantly lower margins than
data revenues, grew 10.3% qoq, the change in revenue mix led to the
consolidated EBITDA coming in 16% below our expectations.
* Neotel’s 2QFY10 net loss up 13.8% qoq: Neotel’s implied 2QFY10 net
loss (based on TCOM’s 27% share of loss which it consolidates) was
Rs1.37 bn (up 13.8% qoq). Neotel’s 1HFY10 net loss of Rs2.57 bn is in line
with tour FY10E net loss forecast of Rs5.5 bn.
* Maintain SELL; placing earnings forecast, TP under review: Viewing
TCOM’s stand-alone and consolidated 1HFY10 results in perspective with
our full-year (FY10) earnings forecast, we infer – (1) Implied growth in
2HFY10 consolidated EBITDA is 47%, (2) implied decline in 2HFY10 net
loss is 76%, and (3) implied growth in 2HFY10 stand-alone EBITDA/net
profit is 61%/309% respectively – both scenarios appear unlikely.
Accordingly, pending a meeting with the management, we place our
earning estimates and TP for TCOM under review.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
SELL
Price: Rs375 Target Price: Under Review
2QFY10 margins, net profit disappoint
* 2QFY10 consolidated revenues in-line; margins, PAT disappoint:
For 2QFY10, TCOM posted consolidated revenues, EBITDA and net loss of
Rs27.2 bn (up 6.2% qoq), Rs3.3 bn (down 8% qoq) and Rs1.56 bn (vs.
net loss of Rs551 mn in 1QFY10) respectively. At 12.1%, 2QFY10 EBITDA
margin was 240 bps below our estimate – the gap in EBITDA together with
lower-than expected non-operating income led to 2QFY10 net loss being
significantly exaggerated vs. our estimate (Rs580 mn).
* Margin decline attributed to qoq stagnation in non-voice revenues:
A mere 1.6% qoq rise in non-voice revenues suggests pricing pressure in
enterprise/carrier data business, albeit not as severe as in the domestic
market considering that stand-alone 2QFy10 non-voice revenues declined
8.6% qoq. As voice revenues, which entail significantly lower margins than
data revenues, grew 10.3% qoq, the change in revenue mix led to the
consolidated EBITDA coming in 16% below our expectations.
* Neotel’s 2QFY10 net loss up 13.8% qoq: Neotel’s implied 2QFY10 net
loss (based on TCOM’s 27% share of loss which it consolidates) was
Rs1.37 bn (up 13.8% qoq). Neotel’s 1HFY10 net loss of Rs2.57 bn is in line
with tour FY10E net loss forecast of Rs5.5 bn.
* Maintain SELL; placing earnings forecast, TP under review: Viewing
TCOM’s stand-alone and consolidated 1HFY10 results in perspective with
our full-year (FY10) earnings forecast, we infer – (1) Implied growth in
2HFY10 consolidated EBITDA is 47%, (2) implied decline in 2HFY10 net
loss is 76%, and (3) implied growth in 2HFY10 stand-alone EBITDA/net
profit is 61%/309% respectively – both scenarios appear unlikely.
Accordingly, pending a meeting with the management, we place our
earning estimates and TP for TCOM under review.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Sell India Cements
India Cements
Sell
Price: Rs104 Target price (Sep 10): Rs90
Sharp price drop in Southern region to impact ICL
* Southern region experiences sharp price drop: Cement prices have
dropped by Rs20/bag to Rs145/bag in Hyderabad and by Rs30/bag to
Rs210/bag in Chennai in the last month, primarily driven by increased
supplies and slower demand growth. Our Chennai based cement dealer
indicates that prices can drop further by Rs10/bag by end of November
2009. Dealer sources indicate that pricing scenario is expected to
stabilise from March 2010, as most of the government orders are
estimated to start in 4QF10.
* Downgrade earnings on the back of lower realisation outlook:
India Cements (ICL) sells ~85% of its production in the Southern region
and naturally will experience lower realisations. We model cement
realisation drop of c.Rs575/tonne (Rs29/bag) to Rs3,102/tonne till
4QF10 on the base of Rs3,677/tonne in 1QF10. We expect southern
region to be in production level oversupply of c.7 mn tonnes for
FY10/11E, hence pricing environment is expected to be challenging.
* Update on capacity expansion plan: ICL will be completing its
expansion at Clilamakur (AP) in 4QF10 taking the total installed
capacity to 14 mtpa. Company has recently commissioned
enhancement of line I at Vishnupuram, addition of 1.2 mtpa in Malkapur
and 1 mtpa grinding unit at Parli in Maharashtra. ICL has acquired 53%
stake a Indo Zinc (additional 20% by open offer), which will be
executing 1.5 mtpa cement plant at Rajasthan, to be commissioned by
2QF11 at an cost of Rs6 bn. Company plans to add 100 MW thermal
power capacity at its cement plant in Andhra Pradesh and Tamil Nadu at
an cost of Rs5 bn by 1HF11 and acquire a coal mine in Indonesia to
ensure fuel security.
* Maintain Sell with revised target price of Rs90: We believe that
demand slowdown and realisation drop in the Southern region coupled
with lower capital efficiency (lower RoE/RoCE than the peers) will
impact stock valuation. We estimate ICL to report RoCE of 9% and
5.9% for FY10/11E. We lower our EPS estimate for FY10/11 to Rs13.4
and Rs9.2 from Rs17 and Rs15, respectively. We value ICL on EV/tonne
of US$63/tonne to arrive at our Sep 2010 target price of Rs90 (earlier
Rs110, Mar 2010), implying EV/EBITDA multiple of 6.1x for FY11E.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Sell
Price: Rs104 Target price (Sep 10): Rs90
Sharp price drop in Southern region to impact ICL
* Southern region experiences sharp price drop: Cement prices have
dropped by Rs20/bag to Rs145/bag in Hyderabad and by Rs30/bag to
Rs210/bag in Chennai in the last month, primarily driven by increased
supplies and slower demand growth. Our Chennai based cement dealer
indicates that prices can drop further by Rs10/bag by end of November
2009. Dealer sources indicate that pricing scenario is expected to
stabilise from March 2010, as most of the government orders are
estimated to start in 4QF10.
* Downgrade earnings on the back of lower realisation outlook:
India Cements (ICL) sells ~85% of its production in the Southern region
and naturally will experience lower realisations. We model cement
realisation drop of c.Rs575/tonne (Rs29/bag) to Rs3,102/tonne till
4QF10 on the base of Rs3,677/tonne in 1QF10. We expect southern
region to be in production level oversupply of c.7 mn tonnes for
FY10/11E, hence pricing environment is expected to be challenging.
* Update on capacity expansion plan: ICL will be completing its
expansion at Clilamakur (AP) in 4QF10 taking the total installed
capacity to 14 mtpa. Company has recently commissioned
enhancement of line I at Vishnupuram, addition of 1.2 mtpa in Malkapur
and 1 mtpa grinding unit at Parli in Maharashtra. ICL has acquired 53%
stake a Indo Zinc (additional 20% by open offer), which will be
executing 1.5 mtpa cement plant at Rajasthan, to be commissioned by
2QF11 at an cost of Rs6 bn. Company plans to add 100 MW thermal
power capacity at its cement plant in Andhra Pradesh and Tamil Nadu at
an cost of Rs5 bn by 1HF11 and acquire a coal mine in Indonesia to
ensure fuel security.
* Maintain Sell with revised target price of Rs90: We believe that
demand slowdown and realisation drop in the Southern region coupled
with lower capital efficiency (lower RoE/RoCE than the peers) will
impact stock valuation. We estimate ICL to report RoCE of 9% and
5.9% for FY10/11E. We lower our EPS estimate for FY10/11 to Rs13.4
and Rs9.2 from Rs17 and Rs15, respectively. We value ICL on EV/tonne
of US$63/tonne to arrive at our Sep 2010 target price of Rs90 (earlier
Rs110, Mar 2010), implying EV/EBITDA multiple of 6.1x for FY11E.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Market News & Trends
HOT FROM THE PRESS :
* BANKS : Govt decides to double the limit of authorized capital in PSU banks to
help some banks like OBC, Syndicate Bank & UCO Bank to raise funds, which hv
been constrained so far because of the limit
* INFOSYS : CFO denies co looking at acquiring European IT firm Ciber Novasoft
* RELIANCE IND : Sinopec & TPG weigh a joint bid for LyondellBasell..
seperately S&P says limited benefits for Co if bid for LyondellBasell succeeds
* UNITECH : plans to raise $700mn via FCCBs.. seeks Govt nod for the issue
* SATYAM : the Central Bureau of Investigation finds evidence of an additional
Rs47bn corporate fraud in the co, perpetrated by its erstwhile promoters
* EXIDE INDUSTRIES : mgt says sales to remain low & no expectation of growth in
sales of batteries for heavy commercial vehicles in Q3
* GUJARAT FLUOROCHEM : plans to invest Rs 5bn for doubling existing capacity to
meet increased demand from dom and intln mkts
* ACKRUTI CITY : plans to set up Rs 3bn textile park to be completed in a year
* BAJAJ HINDUSTAN : Jt MD says prodn shortfall in India could push sugar prices
higher by 36% to 30 cents/pound, a 29 yr high
* MPHASIS : PAT Rs 9.09bn for yr ending Oct'09, Rev Rs 43.09bn
Corporate News – Industry trends
* The man who spearheaded the Satyam fraud, which had rocked the
corporate world early this year, was booked by the CBI for allegedly
accepting bribe; The country’s premier investigating agency has taken
into custody R Vasudevan, the acting chairman of the Company Law
Board, for allegedly accepting Rs 7 lakh from a company secretary
whose case is being heard by the board (BS)
* Infosys Technologies, the country’s second largest IT services
company, is actively looking at acquiring companies in the consulting
and healthcare spaces in the range of US$400-500 mn (BS)
* Bharat Heavy Electricals Ltd said it has bagged an Rs 56bn contract
from an arm of Jaiprakash Associates for setting up a thermal power
plant in Uttar Pradesh (BL)
* Reliance Industries has reopened about two-thirds of its 1,432
petrol pumps in the country and is selling about 2,000 kilolitres of auto
fuel per day, RIL president-refinery business P Raghavendran said (BS)
* Bhushan Steel may look at doing a JSW Steel-JFElike deal with
Japan’s Sumitomo Metal Industries; Sources said Bhushan might
explore offloading around 2.1 mn shares of its 42 mn shares to
Sumitomo. This was in addition to the joint venture opportunity being
explored for the six mn-tonne Bengal steel project (BS)
* The Foreign Investment Promotion Board (FIPB) has
recommended approving Gucci’s plans to pick-up 51 % stake in Luxury
Goods Retail Ltd, under single brand retail (BL)
* Unitech will raise US$700 mn through FCCBs; the company has
sought approval from the Department of Industrial Policy and Planning
(DIPP) and the Reserve Bank of India to raise the fund through
convertible instruments (ET)
* Hindalco Industries has raised US$600 mn by selling shares to
institutional investors. The issue that was launched on Monday, diluted
Hindalco’s equity capital by 11% and pared down the promoter
shareholding (ET)
* JSW Steel, which last week tied up with Japanese steel giant JFE for
technology, may sell as much as 40% in its upcoming 10-million tonne
steel unit in West Bengal to its overseas partner (ET)
* Sun TV Network Ltd, announced tariff revision for its flagship
channel Sun TV; On the basis of its “sustained viewership and
consistent higher ratings for its serials,” the company has increased its
advertising rates by 9% to 33%, says a press release from the
company (BL)
* Mumbai-based real estate developer Ackruti City plans to set up an
Rs 3bn textile park on 60 acres in suburban Biwandi near here (BL)
* To promote traffic of automobiles through the railways, its
ministry is considering 15 automobile hubs to be set up on PPP across
the country; the railways would provide land for constructing the hubs
and the facilities would be set up by private sector players. These auto
hubs would not only serve as vendor parks, but also have assembling
units where components can be put together before cars are
transported to sales centers (BS)
Economic/Regulatory development
* PRIME Minister Manmohan Singh and US President Barack
Obama attempted to give new impetus to the strategic relationship
and push forward ties in several key areas from climate change to
counter-terrorism; “I believe relations between India and US will be
the defining moment of the 21st century,” said Mr Obama at a joint
press conference after the talks (ET)
* THE auction of 3G spectrum, vital for high-end services such as
ultra-fast internet on mobile, which is slated to begin on January 14, is
likely to be deferred by a ‘few weeks’, as the DoT and the defence
ministry will require more time to coordinate and assign the airwaves
vacated by the armed forces (ET)
International trends
* The US economy grew more slowly than first thought in the
third quarter, but house prices rose for the fifth month in September
and US consumer confidence was up in November in data published on
Thursday, suggesting a slow economic recovery is still intact (BS)
* Lloyds Banking Group Plc, the UK’s biggest mortgage lender, plans
to raise a record 13.5 bn pounds in the country’s biggest rights
offering, selling shares at a 59.5% discount. The bank gained in
London trading (BS)
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
* BANKS : Govt decides to double the limit of authorized capital in PSU banks to
help some banks like OBC, Syndicate Bank & UCO Bank to raise funds, which hv
been constrained so far because of the limit
* INFOSYS : CFO denies co looking at acquiring European IT firm Ciber Novasoft
* RELIANCE IND : Sinopec & TPG weigh a joint bid for LyondellBasell..
seperately S&P says limited benefits for Co if bid for LyondellBasell succeeds
* UNITECH : plans to raise $700mn via FCCBs.. seeks Govt nod for the issue
* SATYAM : the Central Bureau of Investigation finds evidence of an additional
Rs47bn corporate fraud in the co, perpetrated by its erstwhile promoters
* EXIDE INDUSTRIES : mgt says sales to remain low & no expectation of growth in
sales of batteries for heavy commercial vehicles in Q3
* GUJARAT FLUOROCHEM : plans to invest Rs 5bn for doubling existing capacity to
meet increased demand from dom and intln mkts
* ACKRUTI CITY : plans to set up Rs 3bn textile park to be completed in a year
* BAJAJ HINDUSTAN : Jt MD says prodn shortfall in India could push sugar prices
higher by 36% to 30 cents/pound, a 29 yr high
* MPHASIS : PAT Rs 9.09bn for yr ending Oct'09, Rev Rs 43.09bn
Corporate News – Industry trends
* The man who spearheaded the Satyam fraud, which had rocked the
corporate world early this year, was booked by the CBI for allegedly
accepting bribe; The country’s premier investigating agency has taken
into custody R Vasudevan, the acting chairman of the Company Law
Board, for allegedly accepting Rs 7 lakh from a company secretary
whose case is being heard by the board (BS)
* Infosys Technologies, the country’s second largest IT services
company, is actively looking at acquiring companies in the consulting
and healthcare spaces in the range of US$400-500 mn (BS)
* Bharat Heavy Electricals Ltd said it has bagged an Rs 56bn contract
from an arm of Jaiprakash Associates for setting up a thermal power
plant in Uttar Pradesh (BL)
* Reliance Industries has reopened about two-thirds of its 1,432
petrol pumps in the country and is selling about 2,000 kilolitres of auto
fuel per day, RIL president-refinery business P Raghavendran said (BS)
* Bhushan Steel may look at doing a JSW Steel-JFElike deal with
Japan’s Sumitomo Metal Industries; Sources said Bhushan might
explore offloading around 2.1 mn shares of its 42 mn shares to
Sumitomo. This was in addition to the joint venture opportunity being
explored for the six mn-tonne Bengal steel project (BS)
* The Foreign Investment Promotion Board (FIPB) has
recommended approving Gucci’s plans to pick-up 51 % stake in Luxury
Goods Retail Ltd, under single brand retail (BL)
* Unitech will raise US$700 mn through FCCBs; the company has
sought approval from the Department of Industrial Policy and Planning
(DIPP) and the Reserve Bank of India to raise the fund through
convertible instruments (ET)
* Hindalco Industries has raised US$600 mn by selling shares to
institutional investors. The issue that was launched on Monday, diluted
Hindalco’s equity capital by 11% and pared down the promoter
shareholding (ET)
* JSW Steel, which last week tied up with Japanese steel giant JFE for
technology, may sell as much as 40% in its upcoming 10-million tonne
steel unit in West Bengal to its overseas partner (ET)
* Sun TV Network Ltd, announced tariff revision for its flagship
channel Sun TV; On the basis of its “sustained viewership and
consistent higher ratings for its serials,” the company has increased its
advertising rates by 9% to 33%, says a press release from the
company (BL)
* Mumbai-based real estate developer Ackruti City plans to set up an
Rs 3bn textile park on 60 acres in suburban Biwandi near here (BL)
* To promote traffic of automobiles through the railways, its
ministry is considering 15 automobile hubs to be set up on PPP across
the country; the railways would provide land for constructing the hubs
and the facilities would be set up by private sector players. These auto
hubs would not only serve as vendor parks, but also have assembling
units where components can be put together before cars are
transported to sales centers (BS)
Economic/Regulatory development
* PRIME Minister Manmohan Singh and US President Barack
Obama attempted to give new impetus to the strategic relationship
and push forward ties in several key areas from climate change to
counter-terrorism; “I believe relations between India and US will be
the defining moment of the 21st century,” said Mr Obama at a joint
press conference after the talks (ET)
* THE auction of 3G spectrum, vital for high-end services such as
ultra-fast internet on mobile, which is slated to begin on January 14, is
likely to be deferred by a ‘few weeks’, as the DoT and the defence
ministry will require more time to coordinate and assign the airwaves
vacated by the armed forces (ET)
International trends
* The US economy grew more slowly than first thought in the
third quarter, but house prices rose for the fifth month in September
and US consumer confidence was up in November in data published on
Thursday, suggesting a slow economic recovery is still intact (BS)
* Lloyds Banking Group Plc, the UK’s biggest mortgage lender, plans
to raise a record 13.5 bn pounds in the country’s biggest rights
offering, selling shares at a 59.5% discount. The bank gained in
London trading (BS)
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Market Technical View
A Blow-off In The Making
The Nifty lost 13 points over the day to close at 5090. A quiet day
of consolidation at the markets yesterday as the indices opened
flat and corrected in the first half down to support levels only to
recover in the second half and close with minor losses. The intraday
decline led to a 38.2% retracement of the rally from 4930
(last Friday) to 5119 levels that is healthy in nature. The set-up is
now ripe for the markets to complete the “V” shaped recovery
(See Exhibit 1 on Page 2) by testing the highs of Oct 09 in the
next few days. A short knee-jerk reaction from those levels is a
possibility before the indices head towards the MT supply zone
of 18000-18300/5270-5300. The process of negative divergence
on the oscillators has started only now and hence the bulls have
some more time to act. The level of 17100/5074 would continue
to act as strong trading supports on a closing basis. The moving
averages are safely placed below the price action while the
candlestick patterns continue to support the bulls. For the day,
support seen at 5074. Overall, the markets look set to blow-out in
the near term and test the recent highs of 17500/5180.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
The Nifty lost 13 points over the day to close at 5090. A quiet day
of consolidation at the markets yesterday as the indices opened
flat and corrected in the first half down to support levels only to
recover in the second half and close with minor losses. The intraday
decline led to a 38.2% retracement of the rally from 4930
(last Friday) to 5119 levels that is healthy in nature. The set-up is
now ripe for the markets to complete the “V” shaped recovery
(See Exhibit 1 on Page 2) by testing the highs of Oct 09 in the
next few days. A short knee-jerk reaction from those levels is a
possibility before the indices head towards the MT supply zone
of 18000-18300/5270-5300. The process of negative divergence
on the oscillators has started only now and hence the bulls have
some more time to act. The level of 17100/5074 would continue
to act as strong trading supports on a closing basis. The moving
averages are safely placed below the price action while the
candlestick patterns continue to support the bulls. For the day,
support seen at 5074. Overall, the markets look set to blow-out in
the near term and test the recent highs of 17500/5180.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Intraday Tips
LT
Weekly Trend Decider 1634. Down side support are 1600-1575 are bull favour.. Today above 1657, one side and play for long side. Looks good and buy side.
TATA POWER
Weekly Trend Decider 1327. Trading range are 1300-1350, break and crossover in either side ... above 1350 close eye.... And sharp move.....
SUZLON ENERGY
Weekly Trend Decider 73.... Some profit taking after a sharp rise in falling market..... Below 70 selling opportunity.
SBI
Weekly Trend Decider 2316. Today support are 2290, higher level resistance are 2330-2345, thereafter do not remain short.
BANK OF BARODA
Weekly Trend Decider 540. Today support are 540, higher level above 550, non stop target ............. Very hot...
IDBI
Keep a stop loss 131 and super hot sell, down side below 122 target 111 or below. Weekly Trend Decider 1126.
AXIS BANK
Weekly Trend Decider 990. Today support 980 and resistance are 1028....
• L&T Nov. Future (Rs. 1648)
Buy only on a move above 1657 with a stop loss
below 1640 for an intra-day target of 1682 and 1695.
• Bank Of Baroda Nov. Future (Rs. 547)
Buy only in the region 544-546 with a stop loss
below 540 for an intra-day target of 555.
Nifty Future + Bank Nifty + CNX IT
Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.
Trading range of the last two days are 5120 to 5050......
Higher level resistance are 5120-5130, crossover, will more
Short covering in the market, down side below 5050, easily
Wipe out 30-50 points.
If hold 5000, do not play for short sell....and likely bounce back.
{Today Trend Decider - 5085}
Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to November indicating good carry over and bullish sign .
CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.
NIFTY
Over all trend is up and it high of 5079 with extremely volatile. We may expected that the strong support are 4740, as long as hold possible target are higher level 5150-5180-5300 or above. We advise to readers, any decline or panic should be accumulate and excellent buying opportunity. Over all in the Indian market, global cues would be play a important role, as far as the sentiment is concerned, some economic data is also due in the coming week which is watch out.
Today support are 5050, break below it will come down up to 5000, higher level resistance are 5100-5120, successfully crossover will one side move and further break out. Weekly trend decider 5021.
BSE
BSE: Short term trend of the Market are remain positive as hold 16000 level, but higher level it will face strong resistance 17400-17500, successfully crossover and closed above another bull move which may go beyond 18500-19000. Long term trend are still good and we expect in 2010 it will test new high.
Today : Support are 17000, below further weakness, higher level resistance are 17230-17250. Weekly trend decider 16918.
Dow : Last week Dow recorded a fresh move and almost tested new high of 10438 which is almost achieved . As remain up trend, next intermediate target likely 11000-11300-11500 in near term. On the other hand we consider support 10000 and major support are 9500, below deeper correction can not be ruled out.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Weekly Trend Decider 1634. Down side support are 1600-1575 are bull favour.. Today above 1657, one side and play for long side. Looks good and buy side.
TATA POWER
Weekly Trend Decider 1327. Trading range are 1300-1350, break and crossover in either side ... above 1350 close eye.... And sharp move.....
SUZLON ENERGY
Weekly Trend Decider 73.... Some profit taking after a sharp rise in falling market..... Below 70 selling opportunity.
SBI
Weekly Trend Decider 2316. Today support are 2290, higher level resistance are 2330-2345, thereafter do not remain short.
BANK OF BARODA
Weekly Trend Decider 540. Today support are 540, higher level above 550, non stop target ............. Very hot...
IDBI
Keep a stop loss 131 and super hot sell, down side below 122 target 111 or below. Weekly Trend Decider 1126.
AXIS BANK
Weekly Trend Decider 990. Today support 980 and resistance are 1028....
• L&T Nov. Future (Rs. 1648)
Buy only on a move above 1657 with a stop loss
below 1640 for an intra-day target of 1682 and 1695.
• Bank Of Baroda Nov. Future (Rs. 547)
Buy only in the region 544-546 with a stop loss
below 540 for an intra-day target of 555.
Nifty Future + Bank Nifty + CNX IT
Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.
Trading range of the last two days are 5120 to 5050......
Higher level resistance are 5120-5130, crossover, will more
Short covering in the market, down side below 5050, easily
Wipe out 30-50 points.
If hold 5000, do not play for short sell....and likely bounce back.
{Today Trend Decider - 5085}
Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to November indicating good carry over and bullish sign .
CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.
NIFTY
Over all trend is up and it high of 5079 with extremely volatile. We may expected that the strong support are 4740, as long as hold possible target are higher level 5150-5180-5300 or above. We advise to readers, any decline or panic should be accumulate and excellent buying opportunity. Over all in the Indian market, global cues would be play a important role, as far as the sentiment is concerned, some economic data is also due in the coming week which is watch out.
Today support are 5050, break below it will come down up to 5000, higher level resistance are 5100-5120, successfully crossover will one side move and further break out. Weekly trend decider 5021.
BSE
BSE: Short term trend of the Market are remain positive as hold 16000 level, but higher level it will face strong resistance 17400-17500, successfully crossover and closed above another bull move which may go beyond 18500-19000. Long term trend are still good and we expect in 2010 it will test new high.
Today : Support are 17000, below further weakness, higher level resistance are 17230-17250. Weekly trend decider 16918.
Dow : Last week Dow recorded a fresh move and almost tested new high of 10438 which is almost achieved . As remain up trend, next intermediate target likely 11000-11300-11500 in near term. On the other hand we consider support 10000 and major support are 9500, below deeper correction can not be ruled out.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Monday, November 23, 2009
Hold Shree Renuka Sugars
Shree Renuka Sugars
Hold
Price: Rs 230 Target Price (Sep’10): Rs210
Gains stacked up, again!
* 4Q09 profits lower than estimates, despite significant trading
profits surprise- Shree Renuka (SRSL) reported 4Q09 adjusted profit of
Rs1.01bn vs. our estimate of Rs1.65bn. Trading profits of Rs0.68bn (vs.
our est of Rs0.15bn) off-set substantially lower profits in sugar, cogeneration
and distillery segments. Sugar sales came in 25% lower than
our estimate on account of 9% lower volume (as SRSL holds 0.30mnt of
white sugar vs. our estimate of 0.18mnt) and 17% lower realisation.
Management acknowledged lower realisation (vs. market prices) was on
account of incorrect timing of sales. This coupled with (a) sugar inventory
valuation at Rs21/kg vs. Rs23/kg our est. (b) lower co-generation and
distillery sales due to lower volumes and (c) forex loss Rs57mn (vs. our est
of Rs148mn of income) led to disappointment in results.
* Cane price guidance surprises, cut our gross spread on cane sugar
by 16-17% in FY10/11E– In line with management guidance, we raise
our sugar realisation assumption by 6% for FY10E to Rs33-34/kg (non-levy
sugar) and cane price assumption by 13% to Rs270/quintal for FY10E. This
leads to gross spread (sugar realisation-cane price) of Rs5.4/kg vs.
Rs6.6/kg earlier. SRSL expects sugar production in India to increase by
~40%, leading to some softness in sugar prices. Therefore, we assume 7-
11% drop (YoY) in sugar and cane prices in FY11, curtailing our gross
spread assumption from Rs6.9/kg to Rs5.8/kg (still reflect higher than
FY10E). We believe inventory gains and higher refinery EBITDA could offset
the cut in cane sugar profitability.
* Raise estimates by 7% for FY10E to reflect inventory profits- We
increase inventory EBTIDA gains for FY10E by Rs2.15bn to Rs3.9bn on
account of higher inventory volume and realisation than our earlier
estimates. We increase our refinery EBITDA assumption by 8-15% for
FY10/11E to reflect higher sugar realisation. We note our current estimates
do not factor in SRSL’s Brazilian acquisition Vale Do Ivai (VDI) in current
estimates as operational and financial details are not yet disclosed.
* Raise target price marginally, maintain Hold– We continue to value
SRSL based on 1 year forward up- cycle multiple of 12x FY11EPS of Rs17.6
and arrive at our Sep’10 target price of Rs210 (from Rs208 earlier) and
hence maintain Hold at current price (potential downside of 10%). We note
that while stock price may track sugar prices in near term, we think
concerns over the longevity/severity of the cycle will eventually emerge,
thus impacting valuation multiple. Key risks to our recommendations are
higher sugar realisation and lower cane price than our assumptions.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Hold
Price: Rs 230 Target Price (Sep’10): Rs210
Gains stacked up, again!
* 4Q09 profits lower than estimates, despite significant trading
profits surprise- Shree Renuka (SRSL) reported 4Q09 adjusted profit of
Rs1.01bn vs. our estimate of Rs1.65bn. Trading profits of Rs0.68bn (vs.
our est of Rs0.15bn) off-set substantially lower profits in sugar, cogeneration
and distillery segments. Sugar sales came in 25% lower than
our estimate on account of 9% lower volume (as SRSL holds 0.30mnt of
white sugar vs. our estimate of 0.18mnt) and 17% lower realisation.
Management acknowledged lower realisation (vs. market prices) was on
account of incorrect timing of sales. This coupled with (a) sugar inventory
valuation at Rs21/kg vs. Rs23/kg our est. (b) lower co-generation and
distillery sales due to lower volumes and (c) forex loss Rs57mn (vs. our est
of Rs148mn of income) led to disappointment in results.
* Cane price guidance surprises, cut our gross spread on cane sugar
by 16-17% in FY10/11E– In line with management guidance, we raise
our sugar realisation assumption by 6% for FY10E to Rs33-34/kg (non-levy
sugar) and cane price assumption by 13% to Rs270/quintal for FY10E. This
leads to gross spread (sugar realisation-cane price) of Rs5.4/kg vs.
Rs6.6/kg earlier. SRSL expects sugar production in India to increase by
~40%, leading to some softness in sugar prices. Therefore, we assume 7-
11% drop (YoY) in sugar and cane prices in FY11, curtailing our gross
spread assumption from Rs6.9/kg to Rs5.8/kg (still reflect higher than
FY10E). We believe inventory gains and higher refinery EBITDA could offset
the cut in cane sugar profitability.
* Raise estimates by 7% for FY10E to reflect inventory profits- We
increase inventory EBTIDA gains for FY10E by Rs2.15bn to Rs3.9bn on
account of higher inventory volume and realisation than our earlier
estimates. We increase our refinery EBITDA assumption by 8-15% for
FY10/11E to reflect higher sugar realisation. We note our current estimates
do not factor in SRSL’s Brazilian acquisition Vale Do Ivai (VDI) in current
estimates as operational and financial details are not yet disclosed.
* Raise target price marginally, maintain Hold– We continue to value
SRSL based on 1 year forward up- cycle multiple of 12x FY11EPS of Rs17.6
and arrive at our Sep’10 target price of Rs210 (from Rs208 earlier) and
hence maintain Hold at current price (potential downside of 10%). We note
that while stock price may track sugar prices in near term, we think
concerns over the longevity/severity of the cycle will eventually emerge,
thus impacting valuation multiple. Key risks to our recommendations are
higher sugar realisation and lower cane price than our assumptions.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Buy Infosys Technologies
Infosys Technologies
Buy
Price: Rs2,407 Target Price (Dec 10): Rs2,727
Infrastructure Management – Scaling up
* Infosys’ Infrastructure management services (IMS) practice has
consistently outgrown peers in the past 3 years. Importantly, the
EBITDA margins are in-line with company average and significantly
higher than peers, highlighting Infosys’ ability to grow new
businesses’ at superior margins. With our channel checks pointing
towards acceleration in revenue growth trajectory, Infosys is likely
to outperform, in our view. Retain Buy on Infosys.
* Infrastructure management services (IMS) practice – a
revelation: Contrary to perception of Infosys lagging peers in IMS, we
are positively surprised by a) absolute size of IMS practice
(US$141mn, second largest after Wipro) & b) 10.1% compounded
quarterly growth rate achieved in the past 3 years. Adjusted for the
India business and acquisitions made by peers, we reckon, Infosys IMS
practice may be the largest in the industry.
* Margins at IMS in-line with company average: EBITDA margins at
IMS practice are in-line with the company average (~34%); dispelling
notion of lower margins in new service lines.
* Superior business model driving growth: a) Infosys ability to
convert capital expenditure to operating expenditure, b) transparent
and flexible pricing structure, & c) alliances with hardware and
software vendors. On the back of superior business model, Infosys has
been able to replace global incumbents from existing contracts.
* Revenue growth likely to surprise in FY11/FY12: As highlighted
in our note on Infosys titled “Powering ahead” we believe that revenue
growth is likely to surprise in FY11/12E. Infosys has the highest margin
buffer compared to peers and this should result in superior EPS
growth. We reiterate Buy with a price target of Rs2,727, based on 20x
1 year forward EPS. We remain buyers of tier-1 Indian IT.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Buy
Price: Rs2,407 Target Price (Dec 10): Rs2,727
Infrastructure Management – Scaling up
* Infosys’ Infrastructure management services (IMS) practice has
consistently outgrown peers in the past 3 years. Importantly, the
EBITDA margins are in-line with company average and significantly
higher than peers, highlighting Infosys’ ability to grow new
businesses’ at superior margins. With our channel checks pointing
towards acceleration in revenue growth trajectory, Infosys is likely
to outperform, in our view. Retain Buy on Infosys.
* Infrastructure management services (IMS) practice – a
revelation: Contrary to perception of Infosys lagging peers in IMS, we
are positively surprised by a) absolute size of IMS practice
(US$141mn, second largest after Wipro) & b) 10.1% compounded
quarterly growth rate achieved in the past 3 years. Adjusted for the
India business and acquisitions made by peers, we reckon, Infosys IMS
practice may be the largest in the industry.
* Margins at IMS in-line with company average: EBITDA margins at
IMS practice are in-line with the company average (~34%); dispelling
notion of lower margins in new service lines.
* Superior business model driving growth: a) Infosys ability to
convert capital expenditure to operating expenditure, b) transparent
and flexible pricing structure, & c) alliances with hardware and
software vendors. On the back of superior business model, Infosys has
been able to replace global incumbents from existing contracts.
* Revenue growth likely to surprise in FY11/FY12: As highlighted
in our note on Infosys titled “Powering ahead” we believe that revenue
growth is likely to surprise in FY11/12E. Infosys has the highest margin
buffer compared to peers and this should result in superior EPS
growth. We reiterate Buy with a price target of Rs2,727, based on 20x
1 year forward EPS. We remain buyers of tier-1 Indian IT.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Market Technical View
Getting Back To Square One
The Nifty gained 51 points over the day to close at 5103. The bull
party continued yesterday as well as the indices rallied further
and closed above the resistance levels of 17100/5074 that
provided supply the whole of last week. However the
discouraging aspect of the trading action was the fact that the
markets rallied on low volumes and not-so-great breadth. The
bullish reversal pattern that we had pointed out at 4800 levels a
couple of weeks back saw its target of 5120 almost done
yesterday. The technical set-up remains strong and hence
further upside can be expected in the near term. We still do not
have any topping out patterns on the hourly or daily charts as
yet. Interestingly, the daily oscillators are in buy mode and below
the overbought zone, which is a big positive. The DM/ADX
indicator is setting up for a major buy trigger that should be
confirmed in the next 2-5 days. The ongoing “V” shaped reversal
should take the markets to their Oct 09 highs sometime later this
week. Overall, the ongoing rally should only get stronger with
better breadth and volumes in the days ahead.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
The Nifty gained 51 points over the day to close at 5103. The bull
party continued yesterday as well as the indices rallied further
and closed above the resistance levels of 17100/5074 that
provided supply the whole of last week. However the
discouraging aspect of the trading action was the fact that the
markets rallied on low volumes and not-so-great breadth. The
bullish reversal pattern that we had pointed out at 4800 levels a
couple of weeks back saw its target of 5120 almost done
yesterday. The technical set-up remains strong and hence
further upside can be expected in the near term. We still do not
have any topping out patterns on the hourly or daily charts as
yet. Interestingly, the daily oscillators are in buy mode and below
the overbought zone, which is a big positive. The DM/ADX
indicator is setting up for a major buy trigger that should be
confirmed in the next 2-5 days. The ongoing “V” shaped reversal
should take the markets to their Oct 09 highs sometime later this
week. Overall, the ongoing rally should only get stronger with
better breadth and volumes in the days ahead.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Intraday Tips
RELIANCE
Weekly Trend Decider 2117 . Consider resistance are 2150 and crossover looks positive and higher level target are 2250-2300. Today support are 2169 mark.
ONGC
Lower level support are 1100-1110 and decline to buying opportunity. Weekly Trend Decider 1178 For smooth run it must cross and close above 1210, thereafter no hurdle and big spurt can not be ruled out. Today support are 1175.
TATA POWER
Weekly Trend Decider 1327. Trading range are 1300-1350, break and crossover in either side ... above 1350 close eye....
BHARTI
Weekly Trend Decider 295. Wide trading range of this counter 280 to 320,, breakout range, one side move in either side. Below 280 far and far support are 228.... SUPER HOT SELL.. do not try to bottom finishing.
BALRAMPUR CHINI
Weekly Trend Decider 137.. Down side support are 118-120 and it should not break... otherwise free fall.
RANBAXY
Weekly Trend Decider 422.Down side support are 400.. below weakness, higher level resistance are 431.... Thereafter it will show more power.
MARUTI
Weekly Trend Decider 1514... any decline to buying opportunity. It will show real strength above 1576.. down side support are 1525..... Long stop loss 1390.....
• India Cements Nov. Future (Rs. 104)
Buy only in the region 103-104 with a stop loss
below 101 for an intra-day target of 109.
• GSPL Nov. Future (Rs. 94)
Buy only in the region 93-94 with a stop loss
below 91.5 for an intra-day target of 98.
Nifty Future + Bank Nifty + CNX IT:
Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.
Yesterday High was 5120 and low was 5068. Today likely test support 5090-5080, if break and trade below, lower level target are 5077, 5066, where the buying opportunity, higher level above 5120 and sustained target 5144-5177 can not be ruled out.
{Today Trend Decider - 5090}
Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to Novembmer indicating good carry over and bullish sign .
CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Weekly Trend Decider 2117 . Consider resistance are 2150 and crossover looks positive and higher level target are 2250-2300. Today support are 2169 mark.
ONGC
Lower level support are 1100-1110 and decline to buying opportunity. Weekly Trend Decider 1178 For smooth run it must cross and close above 1210, thereafter no hurdle and big spurt can not be ruled out. Today support are 1175.
TATA POWER
Weekly Trend Decider 1327. Trading range are 1300-1350, break and crossover in either side ... above 1350 close eye....
BHARTI
Weekly Trend Decider 295. Wide trading range of this counter 280 to 320,, breakout range, one side move in either side. Below 280 far and far support are 228.... SUPER HOT SELL.. do not try to bottom finishing.
BALRAMPUR CHINI
Weekly Trend Decider 137.. Down side support are 118-120 and it should not break... otherwise free fall.
RANBAXY
Weekly Trend Decider 422.Down side support are 400.. below weakness, higher level resistance are 431.... Thereafter it will show more power.
MARUTI
Weekly Trend Decider 1514... any decline to buying opportunity. It will show real strength above 1576.. down side support are 1525..... Long stop loss 1390.....
• India Cements Nov. Future (Rs. 104)
Buy only in the region 103-104 with a stop loss
below 101 for an intra-day target of 109.
• GSPL Nov. Future (Rs. 94)
Buy only in the region 93-94 with a stop loss
below 91.5 for an intra-day target of 98.
Nifty Future + Bank Nifty + CNX IT:
Nifty Future : On week to week basis, strong reversal were seen on Friday trading and almost closed with a green. Overall we may consider support are 4900-4890, below it will test 4840 and major support are 4750. Ultimate target are 5150-5180-5200.
Yesterday High was 5120 and low was 5068. Today likely test support 5090-5080, if break and trade below, lower level target are 5077, 5066, where the buying opportunity, higher level above 5120 and sustained target 5144-5177 can not be ruled out.
{Today Trend Decider - 5090}
Bank Nifty : Trend is still is bullish. Any decline to buying opportunity with consider support 8800-8700. Weekly trend decider 5150 In the Bank Nifty, the December series are traded at premium to Novembmer indicating good carry over and bullish sign .
CNX IT : Today support are 5350, higher level resistance are 5500, above more up side. Weekly Trend Decider 5455.OUR TARGET ARE 5700 + . We think that it could gain if the rupee goes lower again.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Market News Trends
HOT FROM THE PRESS NEWS
* RELIANCE : submits an all-cash but non binding bid to buy a controlling stake
in the world's third largest petrochem co Lyondell Basell, if it comes out of
bankruptcy.. press rpts suggest the deal cud be in the range of $10-12bn
* BANKS : RBI will give banks six months more to set aside extra funds fm their
profits to cover NPAs, stretching an earlier deadline of Sept 2010
* PNB : scouting for acquisitions, to focus more in southern & western regions
* ICICI : raises $750mn thru a 5 year bond issue at its Bahrain branch.. the
issue had an order book of $3bn & was participated by over 250 investors
* LUPIN : US based Medicis Pharma files a patent infringement case against the
co for a dermatology medicine
* NALCO : in talks with an Islamic Bank in Indonesia for a Rs100bn loan for its
Iran project, on hold due to cos inability to secure finances for the venture
* JK LAKSHMI CEMENT : plans to raise Rs8bn thru debt and equity to part-finance
setting up a greenfield project
* ESSAR OIL : rpts Royal Dutch Shell Plc to acquire 10% stake in the Co as part
of the deal to sell 3 refineries to Essar
Corporate News – Industry trends
* RELIANCE Industries could pay up to US$12 bn for bankrupt
petrochemicals company Lyondell Basell, bankers familiar with the
transaction said; the deal, if consummated, would take Reliance’s top
line to more than US$80 bn, greater than industry titans such as Dow
Chemicals (ET)
* US-based Medicis Pharmaceutical Corporation has filed a case
against Indian drug maker Lupin, alleging infringement of its patent on
a dermatology medicine (BS)
* The Ministry of Defence has agreed to release 25 MHz of 3G
spectrum in the 1920-1980 MHz band before December 7, but with the
condition that the government will clear the proposal for laying of an
alternative optical-fibre network for the military before that date and
create a monitoring mechanism for the project’s implementation (BS)
* AS AMERICA’S top banks emerge from the Troubled Asset Relief
Program (TARP) and the economy starts showing signs of recovery,
Indian outsourcing vendors, TCS, Infosys and Wipro, are set to gain
off shoring projects worth around US$1 bn over the next one to two
years (ET)
* Rico Auto, a major component supplier to Maruti Suzuki, Hero Honda
and Tata Motors, says it will set up two new plants outside Haryana
after a protracted labour strike at its four plants in the state crippled
production for over two months (ET)
* JK Lakshmi Cement will raise around Rs 8bn through debt and equity
to part-finance setting up a greenfield project in Chhattisgarh in order
to get a foothold in the central and eastern India (ET)
* Steel magnet Lakshmi N Mittal has paid over US$10 mn to double
his stake in Africa focused Ophir Energy Plc to 21.2%, even as he
exited the oil and gas business in the Central Asian nation Kazakhstan
(BS)
* Bajaj Auto is betting big on its Pulsar bike and plans to raise
production to 90,000 units per month, in the next six months with a
sales target of one million units per annum by the end of next financial
year (BS)
* Reliance Industries Ltd’s (RIL) refinery at Jamnagar, Gujarat,
received its first consignment of Cairn India’s Rajasthan crude oil over
the weekend. The first consignment was dispatched on Saturday (BL)
* The life insurance industry is expected to grow by about 15% in the
current fiscal year to touch a total premium income of Rs 2.55 trillion
in 2009-10 (Mint)
* IDBI has awarded the mandate to three leading foreign lenders to
raise a US$225 mn five year syndicated loan in Asian and European
markets by mid December (Mint)
* Suzlon Energy, has shifted most of its management operations back
to its headquarters in Pune; Two years earlier, it had set up a Group
Management Centre in Amsterdam, Netherlands, to run its global
business, spanning 21 countries. Instead, Suzlon will soon inaugurate
a new campus in Pune with a ‘world class work environment’ for about
2,500 employees, named ‘Suzlon One Earth’. This Centre will act as
the new global headquarters and the hub for its operations worldwide
(BS)
Economic/Regulatory development
* The Reserve Bank of India’s second quarter monetary policy review
signalled an exit from the central bank’s accommodative stance,
leading many to believe that interest rates would move in only one
direction – north (BS)
* The subsidy on wheat and rice supplied through the public
distribution system (PDS) has risen sharply, thanks to an increase of
over Rs 100 per quintal in the economic cost of food grains; The level
of subsidy in 2009-10 worked out at between 56 and 60% for the
above poverty line category consumers and between 70 and 72.4% for
the below poverty line consumers (BS)
International trends
* Royal Bank of Scotland Plc sold US$7 bn of debt due in March 2012,
according to data compiled by Bloomberg, equalling the largest US
corporate sale since May (BS)
* Ford Motor Co said it will spend 4 bn to expand in the growing
Brazilian market, the largest investment it has made in the country
(BS)
* Consumer spending probably rebounded in October, showing that
mounting unemployment is restraining, not derailing, the biggest part
of the US economy (ET)
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
* RELIANCE : submits an all-cash but non binding bid to buy a controlling stake
in the world's third largest petrochem co Lyondell Basell, if it comes out of
bankruptcy.. press rpts suggest the deal cud be in the range of $10-12bn
* BANKS : RBI will give banks six months more to set aside extra funds fm their
profits to cover NPAs, stretching an earlier deadline of Sept 2010
* PNB : scouting for acquisitions, to focus more in southern & western regions
* ICICI : raises $750mn thru a 5 year bond issue at its Bahrain branch.. the
issue had an order book of $3bn & was participated by over 250 investors
* LUPIN : US based Medicis Pharma files a patent infringement case against the
co for a dermatology medicine
* NALCO : in talks with an Islamic Bank in Indonesia for a Rs100bn loan for its
Iran project, on hold due to cos inability to secure finances for the venture
* JK LAKSHMI CEMENT : plans to raise Rs8bn thru debt and equity to part-finance
setting up a greenfield project
* ESSAR OIL : rpts Royal Dutch Shell Plc to acquire 10% stake in the Co as part
of the deal to sell 3 refineries to Essar
Corporate News – Industry trends
* RELIANCE Industries could pay up to US$12 bn for bankrupt
petrochemicals company Lyondell Basell, bankers familiar with the
transaction said; the deal, if consummated, would take Reliance’s top
line to more than US$80 bn, greater than industry titans such as Dow
Chemicals (ET)
* US-based Medicis Pharmaceutical Corporation has filed a case
against Indian drug maker Lupin, alleging infringement of its patent on
a dermatology medicine (BS)
* The Ministry of Defence has agreed to release 25 MHz of 3G
spectrum in the 1920-1980 MHz band before December 7, but with the
condition that the government will clear the proposal for laying of an
alternative optical-fibre network for the military before that date and
create a monitoring mechanism for the project’s implementation (BS)
* AS AMERICA’S top banks emerge from the Troubled Asset Relief
Program (TARP) and the economy starts showing signs of recovery,
Indian outsourcing vendors, TCS, Infosys and Wipro, are set to gain
off shoring projects worth around US$1 bn over the next one to two
years (ET)
* Rico Auto, a major component supplier to Maruti Suzuki, Hero Honda
and Tata Motors, says it will set up two new plants outside Haryana
after a protracted labour strike at its four plants in the state crippled
production for over two months (ET)
* JK Lakshmi Cement will raise around Rs 8bn through debt and equity
to part-finance setting up a greenfield project in Chhattisgarh in order
to get a foothold in the central and eastern India (ET)
* Steel magnet Lakshmi N Mittal has paid over US$10 mn to double
his stake in Africa focused Ophir Energy Plc to 21.2%, even as he
exited the oil and gas business in the Central Asian nation Kazakhstan
(BS)
* Bajaj Auto is betting big on its Pulsar bike and plans to raise
production to 90,000 units per month, in the next six months with a
sales target of one million units per annum by the end of next financial
year (BS)
* Reliance Industries Ltd’s (RIL) refinery at Jamnagar, Gujarat,
received its first consignment of Cairn India’s Rajasthan crude oil over
the weekend. The first consignment was dispatched on Saturday (BL)
* The life insurance industry is expected to grow by about 15% in the
current fiscal year to touch a total premium income of Rs 2.55 trillion
in 2009-10 (Mint)
* IDBI has awarded the mandate to three leading foreign lenders to
raise a US$225 mn five year syndicated loan in Asian and European
markets by mid December (Mint)
* Suzlon Energy, has shifted most of its management operations back
to its headquarters in Pune; Two years earlier, it had set up a Group
Management Centre in Amsterdam, Netherlands, to run its global
business, spanning 21 countries. Instead, Suzlon will soon inaugurate
a new campus in Pune with a ‘world class work environment’ for about
2,500 employees, named ‘Suzlon One Earth’. This Centre will act as
the new global headquarters and the hub for its operations worldwide
(BS)
Economic/Regulatory development
* The Reserve Bank of India’s second quarter monetary policy review
signalled an exit from the central bank’s accommodative stance,
leading many to believe that interest rates would move in only one
direction – north (BS)
* The subsidy on wheat and rice supplied through the public
distribution system (PDS) has risen sharply, thanks to an increase of
over Rs 100 per quintal in the economic cost of food grains; The level
of subsidy in 2009-10 worked out at between 56 and 60% for the
above poverty line category consumers and between 70 and 72.4% for
the below poverty line consumers (BS)
International trends
* Royal Bank of Scotland Plc sold US$7 bn of debt due in March 2012,
according to data compiled by Bloomberg, equalling the largest US
corporate sale since May (BS)
* Ford Motor Co said it will spend 4 bn to expand in the growing
Brazilian market, the largest investment it has made in the country
(BS)
* Consumer spending probably rebounded in October, showing that
mounting unemployment is restraining, not derailing, the biggest part
of the US economy (ET)
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Buy Bharti Airtel
Bharti Airtel
BUY
Price: Rs289 Target Price (Sept 2010): Rs360
Roaming tariffs lowered ahead of MNP
* What’s new: Bharti Airtel (BRTI) has introduced a new tariff plan ‘Turbo’
wherein airtime charge for roaming calls have been slashed by 20-60%.
To enroll into this tariff plan, a prepaid sub is required to pay a fee of Rs98
(Rs99 for subs on per-sec billing) with a 1-yr validity, while a postpaid sub
needs to take a tariff plan entailing a monthly rental of Rs249 (Rs299 for
subs on per-sec billing). Pulse rate for calls while roaming remains 1-min.
* Analysis: [1] BRTI’s Turbo offering is an extension of its Freedom (1-
1.2p/sec) and Advantage (50p-60p/min) tariff plans. While airtime charge
on roaming calls drops from 20-60%, the enrolment fee is Rs98/99 (for a
prepaid sub) vs. Rs50/69 for the Advantage/Freedom plan. [2] Advantage
/Freedom subs need to pay the full enrollment fee (Rs98/99) to switch to
the Turbo plan. [3] Impact on ARPUs is highly sensitive to two variables –
proportion of I/O roaming calls and traffic elasticity. Assuming 10% of a
subscriber’s call traffic emanates from ‘national roaming’, BRTI’s overall
wireless ARPU could be dented by 4-5% assuming minimal traffic elasticity
(Exhibit 1). [4] Ignoring the proportion of I/O roaming calls for a sub, ballpark
calculations indicate that assuming zero elasticity, national roaming
ARPU for a subscriber could drop by 40% (Exhibit 2), implying overall
ARPU decline of 4% (we estimate ~10% of BRTI’s wireless revenues come
from national roaming). [5] 15% roaming traffic elasticity would reduce
the potential dent on wireless ARPUs to ~3%; if a Turbo plan subscriber
maintains his/her monthly outlay, BRTI’s ARPU would marginally rise.
* Implications: We maintain our earning estimates and BUY rating for BRTI
(TP of Rs360); advise investors to accumulate the stock with a 12-mth
horizon. Our wireless revenue forecast for BRTI captures a 9.4%/7.5% qoq
drop in BRTI’s wireless ARPUs in 3QFY10E/4QFY10E. We expect near term
price performance to be muted as competition peaks and impact of per-sec
billing on wireless revenues/margins manifest in 2HFY10 results.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
BUY
Price: Rs289 Target Price (Sept 2010): Rs360
Roaming tariffs lowered ahead of MNP
* What’s new: Bharti Airtel (BRTI) has introduced a new tariff plan ‘Turbo’
wherein airtime charge for roaming calls have been slashed by 20-60%.
To enroll into this tariff plan, a prepaid sub is required to pay a fee of Rs98
(Rs99 for subs on per-sec billing) with a 1-yr validity, while a postpaid sub
needs to take a tariff plan entailing a monthly rental of Rs249 (Rs299 for
subs on per-sec billing). Pulse rate for calls while roaming remains 1-min.
* Analysis: [1] BRTI’s Turbo offering is an extension of its Freedom (1-
1.2p/sec) and Advantage (50p-60p/min) tariff plans. While airtime charge
on roaming calls drops from 20-60%, the enrolment fee is Rs98/99 (for a
prepaid sub) vs. Rs50/69 for the Advantage/Freedom plan. [2] Advantage
/Freedom subs need to pay the full enrollment fee (Rs98/99) to switch to
the Turbo plan. [3] Impact on ARPUs is highly sensitive to two variables –
proportion of I/O roaming calls and traffic elasticity. Assuming 10% of a
subscriber’s call traffic emanates from ‘national roaming’, BRTI’s overall
wireless ARPU could be dented by 4-5% assuming minimal traffic elasticity
(Exhibit 1). [4] Ignoring the proportion of I/O roaming calls for a sub, ballpark
calculations indicate that assuming zero elasticity, national roaming
ARPU for a subscriber could drop by 40% (Exhibit 2), implying overall
ARPU decline of 4% (we estimate ~10% of BRTI’s wireless revenues come
from national roaming). [5] 15% roaming traffic elasticity would reduce
the potential dent on wireless ARPUs to ~3%; if a Turbo plan subscriber
maintains his/her monthly outlay, BRTI’s ARPU would marginally rise.
* Implications: We maintain our earning estimates and BUY rating for BRTI
(TP of Rs360); advise investors to accumulate the stock with a 12-mth
horizon. Our wireless revenue forecast for BRTI captures a 9.4%/7.5% qoq
drop in BRTI’s wireless ARPUs in 3QFY10E/4QFY10E. We expect near term
price performance to be muted as competition peaks and impact of per-sec
billing on wireless revenues/margins manifest in 2HFY10 results.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Indian Banks: Top Picks
a) ICICI Bank (CMP - Rs 890, TP - Rs 1,000)
Positive impact of corrective actions has set the base to accelerate:
Meaningful impact of the initiatives taken by ICICI Bank to strengthen liabilities
franchise and consolidate retail portfolio is quite visible with significant mobilisation
of CASA deposits, domestic margin improvement, decline in adjusted credit cost
and significant cost controls. These considerable fundamental improvements have
set the base for acceleration in assets going forward. The impact of corrective
actions taken over the past several years would be completely visible in FY11E and
we expect a) Assets growth to improve to 18% p.a. in FY11E and FY12E, b)
Margins to improve from 2.2% in FY09 to 2.7% in FY12E, c) Fee income growth to
gain momentum d) LLP charge to peak out in FY10E at 1.9% and improve to 1.6%
by FY12E. Collectively, these improvements would result in risk-adjusted margins
to expand from 88 bps in FY09 to 183 bps in FY12E and ROA to improve from 96
bps in FY09 to ~120 bps in FY12E. Hence, we expect PAT to register a strong
growth of ~17% CAGR during FY09-12E (despite expected decline of 5% in
FY10E). While ROE would remain low for ICICI Bank for few years, we believe price
multiples would also be determined by quality of earnings (which would be
substantially better going ahead). We value the parent at 15x Oct’11E EPS,
implying standalone value of Rs 765 per share. We value subsidiaries at Rs 235
(net of cost of investments), implying Oct’10 TP of Rs. 1,000.
b) HDFC Bank (CMP - Rs 1,725, TP - Rs 1,900)
Acceleration in Loan Book: Improved economic outlook and reduced NPA risk at the
macro level and significantly expanded branch network, continued superior risk adjusted
margins and improvement in cost ratios at company level would drive strong assets and
earning growth for HDFC Bank. Acceleration in loan book is clearly visible in 2Q’10
results and we expect HDFC bank to achieve strong a loan growth as the demand for
loans has picked up significantly in various retail segments. We expect HDFC Bank to
deliver a strong PAT growth of 24% CAGR during FY09-12E. We value HDFC Bank at 22x
Sept’11 EPS (implied FY11E P/BV of 3.7x), implying Sept’10 target price of Rs
1,900.
c) Axis Bank (CMP - Rs 990, TP - Rs 1,175)
Continues to deliver despite challenges: Axis Bank is in consolidation mode
given credit quality pressure the bank is facing. We expect margins to remain at
elevated levels in 2H’10 as the bank deploys recently raised equity and continued repricing
of high cost bulk deposits. We expect NII to witness a strong growth of ~25%
CAGR during FY09-12E. Asset quality remains under pressure, however we expect
abatement in credit costs from FY11 ss the benefits of significant decline in interest rates
and improved economic growth flow down. We expect PAT to register a strong growth of
20% CAGR during FY09-12E, and ROE to recover to ~17% in FY12E post the recent
dilution. We value Axis Bank at 16x Sept’11 EPS (implied FY11E P/BV of 2.6x), implying
Sept’10 target price of Rs 1,175.
d) ING Vysya Bank (CMP - Rs 299, TP - Rs 375)
Improvement in profitability: With the induction of new MD and CEO, Mr.
Shailendra Bhandari, we believe that the growth for the bank is set to accelerate as
management makes higher than system credit growth a priority. ROA of IVB is set to
expand from 66 bps in FY09 to 80 bps in FY12E driven by improved margins, cost ratios
and lower provisions. Improving profitability would result in strong earnings growth
of 27% and 32% in FY11E and FY12E respectively. We believe IVB is at an inflexion
point and has a strong re-rating potential given profitability improvement over the
next 2 years. We value ING Vysya Bank at 13x Oct’11 EPS (implied FY11E P/BV of
1.8x), implying Oct’10 target price of Rs 375.
e) Yes Bank (CMP - Rs 249, TP - Rs 315)
Growth is back, superior return ratios to continue going ahead: Loan growth
during 2Q’10 was strong at 42% yoy respectively (29% sequentially) while incremental
increase in credit was the highest in 3 years. Since the bank is not facing credit quality
pressure, it is in a position to accelerate growth in the current environment and
consequently gain market share. Asset quality has remained strong even during the
recent crisis with gross and net NPLs at 0.31% and 0.08% respectively. With
acceleration in loan growth, capital market improvement and healthy asset quality, Yes
Bank is on track to continue to maintain its superior return ratios. We expect ROA and
ROE of ~ 1.5% and ~19% in FY12E, highest amongst its peer group. We value Yes Bank
at 16x Sept’11 EPS (implied FY11E P/BV of 3x) which seems reasonable given the
growth potential for the bank, implying Oct’10 target price of Rs 315.
f) Bank of Baroda (CMP - Rs 533, TP - Rs 615)
Strong performance to continue: Driven by improved margins and recovery in loan
growth we expect BOB to continue to post strong numbers going ahead. Consequently,
we expect robust NII growth of 28% yoy growth in FY11E. Asset quality continues to
remain healthy with gross NPA and net NPA at 1.3% & 0.27% respectively and coverage
ratio of 79% which is among the best in the industry. We expect BOB to generate stable
ROA of 1% going forward in FY11E as the positive impact of margin improvement and
fee income traction would be negated to an extent by lower treasury profits and higher
credit cost. We expect BOB to generate healthy ROE of ~20% in FY11E and FY12E. We
value BOB at 1.35x adjusted book based on a normalised ROE of 19.2% which gives
Oct’10 TP of Rs 615.
i) Punjab National Bank (CMP - Rs 895, TP - Rs 1,000)
Quality deserves premium: PNB continues to enjoy one of the highest margins in the
industry due to better yields on loans (due to increased proportion of SME loans), high
CASA ratio & deposit repricing. Continued branch expansion (184 new branches in
1H’10) and high CASA ratio would support margins going forward. We expect NII to
expand at 18% CAGR during FY09-12E. Gross NPA & Net NPA of 1.58% & 0.14%
respectively and coverage ratio at 91% is among the best in the industry. Going forward
we expect a) margin to remain stable, b) credit growth to remain robust, c) lower
treasury income and recoveries, d) adjusted credit cost to increase from 33 bps in FY09
to 103 bps in FY11E. We expect ROA to decline marginally before stabilizing in the range
of 1.18% in FY11, and ROE to remain strong at ~22%. We value the stock at 1.5x
adjusted book based on a normalised ROE of 19.9% implying Oct’10 TP of Rs 1,000.
j) Union Bank of India (CMP - Rs 260, TP - Rs 300)
Well managed on the core front: We expect a strong recovery in NIM in coming
quarters and expect NII to post a strong 30% yoy growth in FY11E with credit growth at
18%. Asset quality remains top class with net NPL ratio at 0.23% and coverage ratio of
88%. The bank is on track to generate healthy ROE of over 20% going ahead with
strong recovery in margins and healthy fee income growth to neutralize the adverse
impact of significantly lower treasury income and higher credit costs. We arrive at
Oct’10 TP of Rs 300, valuing the stock at 1.4x adjusted book based on a normalised
ROE of 19.8%.
k) Oriental Bank of Commerce (CMP - Rs 277, TP - Rs 300)
Improvement in core earnings to lead to outperformance: Post its amalgamation
with GTB, OBC has been the biggest laggard amongst banks. While BSE Bankex has
given a return of c. 260% since July’04, OBC has remained flat during the same period
underperforming the index by c.260% which we believe is set to reverse given legacy
issues are behind the bank. Core earnings for OBC will continue to improve driven by
margin expansion and robust growth in fee income. Trading at 0.8x and 5.6x FY11E
book and earnings respectively, we believe that the current valuations are attractive
with chances of negative surprise remote. Based on a normalised ROE of 15.5%, we
value the banking business at 0.84x book implying value of Rs 270 per share. Further,
OBC has 23% stake in life insurance JV with HSBC and Canara Bank which we value at
Rs 30 per share.
Note: More intra-day opportunities will be provided
live during the market hours
For More information Visit : http://www.insighttechnical.net
Email : contact@insighttechnical.net
Contact : +91 9822226867
Positive impact of corrective actions has set the base to accelerate:
Meaningful impact of the initiatives taken by ICICI Bank to strengthen liabilities
franchise and consolidate retail portfolio is quite visible with significant mobilisation
of CASA deposits, domestic margin improvement, decline in adjusted credit cost
and significant cost controls. These considerable fundamental improvements have
set the base for acceleration in assets going forward. The impact of corrective
actions taken over the past several years would be completely visible in FY11E and
we expect a) Assets growth to improve to 18% p.a. in FY11E and FY12E, b)
Margins to improve from 2.2% in FY09 to 2.7% in FY12E, c) Fee income growth to
gain momentum d) LLP charge to peak out in FY10E at 1.9% and improve to 1.6%
by FY12E. Collectively, these improvements would result in risk-adjusted margins
to expand from 88 bps in FY09 to 183 bps in FY12E and ROA to improve from 96
bps in FY09 to ~120 bps in FY12E. Hence, we expect PAT to register a strong
growth of ~17% CAGR during FY09-12E (despite expected decline of 5% in
FY10E). While ROE would remain low for ICICI Bank for few years, we believe price
multiples would also be determined by quality of earnings (which would be
substantially better going ahead). We value the parent at 15x Oct’11E EPS,
implying standalone value of Rs 765 per share. We value subsidiaries at Rs 235
(net of cost of investments), implying Oct’10 TP of Rs. 1,000.
b) HDFC Bank (CMP - Rs 1,725, TP - Rs 1,900)
Acceleration in Loan Book: Improved economic outlook and reduced NPA risk at the
macro level and significantly expanded branch network, continued superior risk adjusted
margins and improvement in cost ratios at company level would drive strong assets and
earning growth for HDFC Bank. Acceleration in loan book is clearly visible in 2Q’10
results and we expect HDFC bank to achieve strong a loan growth as the demand for
loans has picked up significantly in various retail segments. We expect HDFC Bank to
deliver a strong PAT growth of 24% CAGR during FY09-12E. We value HDFC Bank at 22x
Sept’11 EPS (implied FY11E P/BV of 3.7x), implying Sept’10 target price of Rs
1,900.
c) Axis Bank (CMP - Rs 990, TP - Rs 1,175)
Continues to deliver despite challenges: Axis Bank is in consolidation mode
given credit quality pressure the bank is facing. We expect margins to remain at
elevated levels in 2H’10 as the bank deploys recently raised equity and continued repricing
of high cost bulk deposits. We expect NII to witness a strong growth of ~25%
CAGR during FY09-12E. Asset quality remains under pressure, however we expect
abatement in credit costs from FY11 ss the benefits of significant decline in interest rates
and improved economic growth flow down. We expect PAT to register a strong growth of
20% CAGR during FY09-12E, and ROE to recover to ~17% in FY12E post the recent
dilution. We value Axis Bank at 16x Sept’11 EPS (implied FY11E P/BV of 2.6x), implying
Sept’10 target price of Rs 1,175.
d) ING Vysya Bank (CMP - Rs 299, TP - Rs 375)
Improvement in profitability: With the induction of new MD and CEO, Mr.
Shailendra Bhandari, we believe that the growth for the bank is set to accelerate as
management makes higher than system credit growth a priority. ROA of IVB is set to
expand from 66 bps in FY09 to 80 bps in FY12E driven by improved margins, cost ratios
and lower provisions. Improving profitability would result in strong earnings growth
of 27% and 32% in FY11E and FY12E respectively. We believe IVB is at an inflexion
point and has a strong re-rating potential given profitability improvement over the
next 2 years. We value ING Vysya Bank at 13x Oct’11 EPS (implied FY11E P/BV of
1.8x), implying Oct’10 target price of Rs 375.
e) Yes Bank (CMP - Rs 249, TP - Rs 315)
Growth is back, superior return ratios to continue going ahead: Loan growth
during 2Q’10 was strong at 42% yoy respectively (29% sequentially) while incremental
increase in credit was the highest in 3 years. Since the bank is not facing credit quality
pressure, it is in a position to accelerate growth in the current environment and
consequently gain market share. Asset quality has remained strong even during the
recent crisis with gross and net NPLs at 0.31% and 0.08% respectively. With
acceleration in loan growth, capital market improvement and healthy asset quality, Yes
Bank is on track to continue to maintain its superior return ratios. We expect ROA and
ROE of ~ 1.5% and ~19% in FY12E, highest amongst its peer group. We value Yes Bank
at 16x Sept’11 EPS (implied FY11E P/BV of 3x) which seems reasonable given the
growth potential for the bank, implying Oct’10 target price of Rs 315.
f) Bank of Baroda (CMP - Rs 533, TP - Rs 615)
Strong performance to continue: Driven by improved margins and recovery in loan
growth we expect BOB to continue to post strong numbers going ahead. Consequently,
we expect robust NII growth of 28% yoy growth in FY11E. Asset quality continues to
remain healthy with gross NPA and net NPA at 1.3% & 0.27% respectively and coverage
ratio of 79% which is among the best in the industry. We expect BOB to generate stable
ROA of 1% going forward in FY11E as the positive impact of margin improvement and
fee income traction would be negated to an extent by lower treasury profits and higher
credit cost. We expect BOB to generate healthy ROE of ~20% in FY11E and FY12E. We
value BOB at 1.35x adjusted book based on a normalised ROE of 19.2% which gives
Oct’10 TP of Rs 615.
i) Punjab National Bank (CMP - Rs 895, TP - Rs 1,000)
Quality deserves premium: PNB continues to enjoy one of the highest margins in the
industry due to better yields on loans (due to increased proportion of SME loans), high
CASA ratio & deposit repricing. Continued branch expansion (184 new branches in
1H’10) and high CASA ratio would support margins going forward. We expect NII to
expand at 18% CAGR during FY09-12E. Gross NPA & Net NPA of 1.58% & 0.14%
respectively and coverage ratio at 91% is among the best in the industry. Going forward
we expect a) margin to remain stable, b) credit growth to remain robust, c) lower
treasury income and recoveries, d) adjusted credit cost to increase from 33 bps in FY09
to 103 bps in FY11E. We expect ROA to decline marginally before stabilizing in the range
of 1.18% in FY11, and ROE to remain strong at ~22%. We value the stock at 1.5x
adjusted book based on a normalised ROE of 19.9% implying Oct’10 TP of Rs 1,000.
j) Union Bank of India (CMP - Rs 260, TP - Rs 300)
Well managed on the core front: We expect a strong recovery in NIM in coming
quarters and expect NII to post a strong 30% yoy growth in FY11E with credit growth at
18%. Asset quality remains top class with net NPL ratio at 0.23% and coverage ratio of
88%. The bank is on track to generate healthy ROE of over 20% going ahead with
strong recovery in margins and healthy fee income growth to neutralize the adverse
impact of significantly lower treasury income and higher credit costs. We arrive at
Oct’10 TP of Rs 300, valuing the stock at 1.4x adjusted book based on a normalised
ROE of 19.8%.
k) Oriental Bank of Commerce (CMP - Rs 277, TP - Rs 300)
Improvement in core earnings to lead to outperformance: Post its amalgamation
with GTB, OBC has been the biggest laggard amongst banks. While BSE Bankex has
given a return of c. 260% since July’04, OBC has remained flat during the same period
underperforming the index by c.260% which we believe is set to reverse given legacy
issues are behind the bank. Core earnings for OBC will continue to improve driven by
margin expansion and robust growth in fee income. Trading at 0.8x and 5.6x FY11E
book and earnings respectively, we believe that the current valuations are attractive
with chances of negative surprise remote. Based on a normalised ROE of 15.5%, we
value the banking business at 0.84x book implying value of Rs 270 per share. Further,
OBC has 23% stake in life insurance JV with HSBC and Canara Bank which we value at
Rs 30 per share.
Note: More intra-day opportunities will be provided
live during the market hours
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