Hem Securities has recommended a buy rating on Dishman Pharmaceuticals & Chemicals with price target of Rs 230 in its May 28, 2009 research report.
“The company is a leader in CRAM business amongst the largest Indian pharmaceutical companies. Moreover, in global crisis and weak economy outlook, the company performance for the financial year ended March 2009 is quite strong. Though promoters have pledged 10.60% share of their holding and 6.44% of total equity capital, the company seems to continue its growth momentum through its high revenue generating base business and seems to be extremely attractive investment opportunity in the Indian Pharmaceutical space.”
“Presently, the stock is trading at Rs 184.35 which is at 10.14 times to its earnings of FY09 of Rs 18.18 and 2.65 times to its book value of Rs 69.59. Since the stock offers good investment opportunity, we ini-tiate a ‘BUY’ signal on the stock with a target price of Rs 230 in medium to long term investment horizon expecting an appreciation of about 25% from the current level of Rs 184.35,” says Hem’s research report.”
Saturday 30 May 2009
Thursday 28 May 2009
Buy ICICI Bank with SL of Rs 690: IIFL
MUMBAI: India Infoline has advised traders to buy ICICI Bank on dips upto Rs 697 with stoploss of Rs 690 for a short-term period of 1-3 days.
“ICICI Bank has seen a steady uptrend from the levels of Rs 252 in March 2009. This was a panic bottom and the stock rallied higher without a retest of this low. On the daily charts, the price movements appear to have formed a higher bottom formation. In last few trading sessions the stock is facing stiff resistance around the levels of Rs 715-720. We expect the stock to breakout from the above levels and attempt the level of Rs 740 in the near term. The bullish formation is confirmed after the stock gave a close above its short-term moving averages. Traders can buy the stock at current levels and on dips up to the levels of Rs 697 with a stop loss of Rs 690 for a short-term target of Rs 740 in the coming trading sessions,” said India Infoline report.
(Note: The above recommendation is a short-term trading idea for a time period of 1-3 days.)
“ICICI Bank has seen a steady uptrend from the levels of Rs 252 in March 2009. This was a panic bottom and the stock rallied higher without a retest of this low. On the daily charts, the price movements appear to have formed a higher bottom formation. In last few trading sessions the stock is facing stiff resistance around the levels of Rs 715-720. We expect the stock to breakout from the above levels and attempt the level of Rs 740 in the near term. The bullish formation is confirmed after the stock gave a close above its short-term moving averages. Traders can buy the stock at current levels and on dips up to the levels of Rs 697 with a stop loss of Rs 690 for a short-term target of Rs 740 in the coming trading sessions,” said India Infoline report.
(Note: The above recommendation is a short-term trading idea for a time period of 1-3 days.)
Power-packed PSU selloff on cards
NEW DELHI: The new government may kickstart its big-ticket disinvestment plan by diluting stakes in power sector firms such as NTPC, NHPC and Power Grid Corporation to 51% over the next few years.
The exercise is expected to fetch around Rs 60,000 crore, while an equal amount will be mobilised by these public sector units (PSUs) to carry out their expansion plans. The amount raised will help the companies meet part of their funding needs. The sector requires over Rs 10,00,000 crore in the next three years. “A proposal in this regard has already been moved by a committee headed by Planning Commission deputy chairman Montek Singh Ahluwalia and officials with power and finance ministries. The committee’s recommendations are expected to drive the policy for power sector during the current Plan,” said a power ministry official. “Disinvestment in power sector PSUs would be undertaken through a combination of follow-on public offers by listed power utilities and initial public offers by others,” said the official, who asked not to be named.
(Source : ET)
The exercise is expected to fetch around Rs 60,000 crore, while an equal amount will be mobilised by these public sector units (PSUs) to carry out their expansion plans. The amount raised will help the companies meet part of their funding needs. The sector requires over Rs 10,00,000 crore in the next three years. “A proposal in this regard has already been moved by a committee headed by Planning Commission deputy chairman Montek Singh Ahluwalia and officials with power and finance ministries. The committee’s recommendations are expected to drive the policy for power sector during the current Plan,” said a power ministry official. “Disinvestment in power sector PSUs would be undertaken through a combination of follow-on public offers by listed power utilities and initial public offers by others,” said the official, who asked not to be named.
(Source : ET)
Stocks ranged; M&M, Bharti gain
MUMBAI: The market remained rangebound in afternoon trade. Short covering was witnessed particularly in realty and metal counters ahead of the F&O expiry. Inflation data did not offer any negative surprises which helped maintain the upbeat sentiment.
The wholesale price index rose 0.61 percent in the 12 months to May 16, matching the previous week's annual rise, government data showed.
At 12:30 pm, BSE Sensex was trading at 14,272.59, higher by 1.15 per cent or 162.95 points. The index touched a high of 14,308.47 and low of 14,078.62. National Stock Exchange’s Nifty climbed 1.09 per cent or 46.65 points to 4322.70. The index touched a high of 4330.40 and low of 4254.85 in trade so far.
Secondline stocks were trading higher as well. BSE Midcap Index climbed 0.28 per cent and BSE Smallcap Index rose 0.14 per cent. Sectorwise, BSE Capital Goods advanced 1.89 per cent, followed by BSE Metals up 1.38 per cent and BSE Oil & Gas up 1.33 per cent. Biggest Sensex gainers comprised Mahindra & Mahindra (4.29%), Bharti Airtel (3.26%), Larsen & Toubro (3.19%), ACC (2.39%) and Reliance Industries (2.16%). Tata Motors (-3.36%), Reliance Infrastructure (-2.5%), Hindalco Industries (-0.86%) and Jaiprakash Associates (-0.39%) were the losers. Market breadth on BSE showed 1613 advanced against 930 declines.
(Source : ET)
The wholesale price index rose 0.61 percent in the 12 months to May 16, matching the previous week's annual rise, government data showed.
At 12:30 pm, BSE Sensex was trading at 14,272.59, higher by 1.15 per cent or 162.95 points. The index touched a high of 14,308.47 and low of 14,078.62. National Stock Exchange’s Nifty climbed 1.09 per cent or 46.65 points to 4322.70. The index touched a high of 4330.40 and low of 4254.85 in trade so far.
Secondline stocks were trading higher as well. BSE Midcap Index climbed 0.28 per cent and BSE Smallcap Index rose 0.14 per cent. Sectorwise, BSE Capital Goods advanced 1.89 per cent, followed by BSE Metals up 1.38 per cent and BSE Oil & Gas up 1.33 per cent. Biggest Sensex gainers comprised Mahindra & Mahindra (4.29%), Bharti Airtel (3.26%), Larsen & Toubro (3.19%), ACC (2.39%) and Reliance Industries (2.16%). Tata Motors (-3.36%), Reliance Infrastructure (-2.5%), Hindalco Industries (-0.86%) and Jaiprakash Associates (-0.39%) were the losers. Market breadth on BSE showed 1613 advanced against 930 declines.
(Source : ET)
Wednesday 27 May 2009
Thermax (Edelweiss)
Energy segment boosts revenue growth; margins above estimates
Thermax’s (TMX) Q4FY09 results were significantly above our expectations, both on revenue growth and profitability fronts. For the quarter, standalone revenues grew 2.8% Y-o-Y to INR 9.5 bn, driven by higher-than-expected growth in the energy segment. Sequentially, revenues grew 19.3% in Q4FY09, a positive surprise after a 1.1% Q-o-Q dip in Q3FY09. Consolidated revenues declined marginally, by 0.4% Y-o-Y, to INR 10.1 bn in the quarter. For Q4FY09, standalone EBITDA grew 5% Y-o-Y to INR 1.3 bn. Standalone EBITDA margins were up ~30bps Y-o-Y to 14.1%. In Q4FY09, TMX posted a forex loss (included other operating expenses) of ~INR 259 mn, excluding which, EBITDA margins stand at ~16.8%. For the quarter, standalone PAT grew 17.1% Y-o-Y to ~INR 943 mn. While depreciation expenses increased 64.5% Y-o-Y to INR 100 mn, effective tax rate was lower ~1,000bps Y-o-Y at 30.3%. Standalone net margin for the quarter was up 120bps Y-o-Y to 9.9%. Consolidated PAT in the quarter grew 27.3%.
Strong order book; intake likely to pick up post H2FY10
TMX’s consolidated order book (adjusted for renegotiated orders) at FY09 end was at INR 30.8 bn. Order intake during the quarter was ~INR 5.8 bn. The scope of a few of TMX’s projects was revised, leading to contraction in the company’s order book. Amongst major orders that were revised, Brahmani Steel’s order value now stands at INR 3 bn (~INR 4.5 bn earlier) and that of Essar at INR 3.8 bn (INR 8 bn earlier). Management expects order accretion to pick up H2FY10 onwards.
Outlook and valuations: Improved visibility; maintain ‘ACCUMULATE’
We are revising up our estimates for FY10 and FY11 for the company on the back of increase in order accretion assumptions for FY10. In spite of the upwards revision we are still projecting a 7% Y-o-Y decline in order accretion in FY10. We have increased our execution period assumptions for the energy business by 30% from prior estimates. Our standalone revenues for FY10E and FY11E are now higher by 9.6% and 16%, respectively, from prior estimates. On the margins front, we now expect a ~20bps Y-o-Y decline at the EBITDA level to 12.5%, compared to earlier expected decline of ~70bps Y-o-Y. Hence, our standalone EPS estimates are higher by 20.2% and 23.1% for FY10 and FY11 at INR 24.1 and INR 29.3, respectively. Subsidiaries contributed INR 0.25 to consolidated EPS in FY09. We believe, if TMX bags a few large orders in the utility segment in FY10, its order backlog at FY10 end could be substantially higher than expectations, leading to higher-than-expected growth in FY11. The stock is trading at a P/E of 16.2x and 13.3x for FY10E and FY11E, respectively. Ex-cash, the stock is trading at a P/E of 15.3x and 11.7x FY10E and FY11E, respectively. We maintain our ‘ACCUMULATE’ recommendation on the stock.
See Report
Thermax’s (TMX) Q4FY09 results were significantly above our expectations, both on revenue growth and profitability fronts. For the quarter, standalone revenues grew 2.8% Y-o-Y to INR 9.5 bn, driven by higher-than-expected growth in the energy segment. Sequentially, revenues grew 19.3% in Q4FY09, a positive surprise after a 1.1% Q-o-Q dip in Q3FY09. Consolidated revenues declined marginally, by 0.4% Y-o-Y, to INR 10.1 bn in the quarter. For Q4FY09, standalone EBITDA grew 5% Y-o-Y to INR 1.3 bn. Standalone EBITDA margins were up ~30bps Y-o-Y to 14.1%. In Q4FY09, TMX posted a forex loss (included other operating expenses) of ~INR 259 mn, excluding which, EBITDA margins stand at ~16.8%. For the quarter, standalone PAT grew 17.1% Y-o-Y to ~INR 943 mn. While depreciation expenses increased 64.5% Y-o-Y to INR 100 mn, effective tax rate was lower ~1,000bps Y-o-Y at 30.3%. Standalone net margin for the quarter was up 120bps Y-o-Y to 9.9%. Consolidated PAT in the quarter grew 27.3%.
Strong order book; intake likely to pick up post H2FY10
TMX’s consolidated order book (adjusted for renegotiated orders) at FY09 end was at INR 30.8 bn. Order intake during the quarter was ~INR 5.8 bn. The scope of a few of TMX’s projects was revised, leading to contraction in the company’s order book. Amongst major orders that were revised, Brahmani Steel’s order value now stands at INR 3 bn (~INR 4.5 bn earlier) and that of Essar at INR 3.8 bn (INR 8 bn earlier). Management expects order accretion to pick up H2FY10 onwards.
Outlook and valuations: Improved visibility; maintain ‘ACCUMULATE’
We are revising up our estimates for FY10 and FY11 for the company on the back of increase in order accretion assumptions for FY10. In spite of the upwards revision we are still projecting a 7% Y-o-Y decline in order accretion in FY10. We have increased our execution period assumptions for the energy business by 30% from prior estimates. Our standalone revenues for FY10E and FY11E are now higher by 9.6% and 16%, respectively, from prior estimates. On the margins front, we now expect a ~20bps Y-o-Y decline at the EBITDA level to 12.5%, compared to earlier expected decline of ~70bps Y-o-Y. Hence, our standalone EPS estimates are higher by 20.2% and 23.1% for FY10 and FY11 at INR 24.1 and INR 29.3, respectively. Subsidiaries contributed INR 0.25 to consolidated EPS in FY09. We believe, if TMX bags a few large orders in the utility segment in FY10, its order backlog at FY10 end could be substantially higher than expectations, leading to higher-than-expected growth in FY11. The stock is trading at a P/E of 16.2x and 13.3x for FY10E and FY11E, respectively. Ex-cash, the stock is trading at a P/E of 15.3x and 11.7x FY10E and FY11E, respectively. We maintain our ‘ACCUMULATE’ recommendation on the stock.
See Report
BSE, NSE rallied strongly
MUMBAI: Stocks rallied Wednesday buoyed by strong cues from overseas markets. Also, with the derivatives series expiry for May due Thursday,
traders covered short positions. Realty, banking and power stocks were in the limelight.
Bombay Stock Exchange’s Sensex settled at provisional 14,095.97, higher by 506.74 points or 3.73 per cent. The index touched a high of 14,122.78 after opening at 13,780.41. National Stock Exchange’s Nifty was up 3.83 per cent or 157.9 points at 4274.60.
The index surged to a high of 4286.45 so far. Secondline stocks witnessed good amount of buying activity as well. BSE Midcap Index was up 3.72 per cent and BSE Smallcap Index rose 3.74 per cent. All sectoral indices ended in the positive terrain, posting decent gains. Biggest Sensex gainers were Reliance Infrastructure (14.79%), Sterlite Industries (9.65%), DLF (8.65%), ONGC (7.65%) and Grasim Industries (6.91%). ACC (-0.59%) and Bharti Airtel (-0.18%) were the only losers in the 30-share index. Market breadth was extremely strong on BSE with 2338 advances against 465 declines. (All figures are provisional)
traders covered short positions. Realty, banking and power stocks were in the limelight.
Bombay Stock Exchange’s Sensex settled at provisional 14,095.97, higher by 506.74 points or 3.73 per cent. The index touched a high of 14,122.78 after opening at 13,780.41. National Stock Exchange’s Nifty was up 3.83 per cent or 157.9 points at 4274.60.
The index surged to a high of 4286.45 so far. Secondline stocks witnessed good amount of buying activity as well. BSE Midcap Index was up 3.72 per cent and BSE Smallcap Index rose 3.74 per cent. All sectoral indices ended in the positive terrain, posting decent gains. Biggest Sensex gainers were Reliance Infrastructure (14.79%), Sterlite Industries (9.65%), DLF (8.65%), ONGC (7.65%) and Grasim Industries (6.91%). ACC (-0.59%) and Bharti Airtel (-0.18%) were the only losers in the 30-share index. Market breadth was extremely strong on BSE with 2338 advances against 465 declines. (All figures are provisional)
Reviving growth a top priority, Budget in first week of July: Pranab Mukherjee
NEW DELHI: Finance minister Pranab Mukherjee on Wednesday said he will present the full budget for 2009-10 in the first week of July.
In his first formal press conference after taking over as full-time finance minister, Mukherjee said the UPA had in its manifesto committed to presenting the budget within 45 days of formation of the government. Keeping that deadline in mind, the budget for 2009-10 will be presented in the first week of July, he said, adding the government would endeavour for the budget to be passed before July 31.
Reviving growth momentum of the economy will be the top priority for Prime Minister Manmohan Singh-led government but revival would not be at the cost of fiscal prudence, he said. Mukherjee said the industry and business hit hard by cost of finance and its easy availability and he would meet bankers soon to get them committed to more benign plan of action to boost credit and its flow.
(Source: ET)
In his first formal press conference after taking over as full-time finance minister, Mukherjee said the UPA had in its manifesto committed to presenting the budget within 45 days of formation of the government. Keeping that deadline in mind, the budget for 2009-10 will be presented in the first week of July, he said, adding the government would endeavour for the budget to be passed before July 31.
Reviving growth momentum of the economy will be the top priority for Prime Minister Manmohan Singh-led government but revival would not be at the cost of fiscal prudence, he said. Mukherjee said the industry and business hit hard by cost of finance and its easy availability and he would meet bankers soon to get them committed to more benign plan of action to boost credit and its flow.
(Source: ET)
ONGC soars 6 pc on reports of increase in natural gas price
MUMBAI: State-run Oil and Natural Gas Corporation surged by six per cent in morning trade on the Bombay Stock Exchange after reports surfaced that the government is likely to double the price of natural gas. Shares of ONGC opened firm at Rs 1,034, then gathered momentum and witnessed an intra-day high of Rs 1,072.80, a jump of 5.95 per cent from its previous closing price.
As per media reports, the government is likely to double the price of natural gas sold through the administered price mechanism (APM) to USD 4.2 per million metric British thermal unit (mmbtu). Similar movement was seen on the National Stock Exchange, where the scrip opened at Rs 1,039.90, then jumped 5.69 per cent and touched its day's high of Rs 1,072.70.
Marketmen said the surge in the counter was witnessed as the gas price revision would benefit the bottomline of the two public sector companies -- Oil and Natural Gas Corporation and Oil India Ltd. On the volume front, good movement was witnessed as over eight lakh shares exchanged hands on both the bourses.
(Source: ET)
As per media reports, the government is likely to double the price of natural gas sold through the administered price mechanism (APM) to USD 4.2 per million metric British thermal unit (mmbtu). Similar movement was seen on the National Stock Exchange, where the scrip opened at Rs 1,039.90, then jumped 5.69 per cent and touched its day's high of Rs 1,072.70.
Marketmen said the surge in the counter was witnessed as the gas price revision would benefit the bottomline of the two public sector companies -- Oil and Natural Gas Corporation and Oil India Ltd. On the volume front, good movement was witnessed as over eight lakh shares exchanged hands on both the bourses.
(Source: ET)
Investors richer by Rs 7L cr in 7 trading session
MUMBAI: A unexpectedly clear mandate to the Congress-led UPA government has made Dalal Street investors richer by over Rs 7 lakh crore.
Since the results of the Lok Sabha elections were announced on May 16, BSE's market capitalisation has increased by Rs 7.04 lakh crore to Rs 44.8 lakh crore now. In other words, in the last seven sessions, on an average, investor wealth has increased by Rs 1 lakh crore. And this is after BSE's market capitalisation declined by a little over Rs 1.1 lakh crore in Tuesday's sliding market.
An analysis of prices of group A and B stocks on BSE also showed that in those seven sessions, four stocks Kaushalya Infra, UB (Holdings), Jindal Capital and Evernnon Systems have at least doubled from where they were on May 15, the day before the poll results were out.
There are 1,410 stocks in BSE's A and B groups, of which 1,372 have given positive returns in the last seven sessions. Of these, 19 have given returns of 75% or more and 165 have returned of over 50%. On the other side of the spectrum, there are 38 stocks that gave negative returns, with three down over 10% in the last seven session. Among sensex stocks, Reliance Infrastructure, with a gain of 37.2% to Rs 1,123, tops the table. Among laggards were Bharti Airtel, TCS and Infosys.
(Source: TOI)
Since the results of the Lok Sabha elections were announced on May 16, BSE's market capitalisation has increased by Rs 7.04 lakh crore to Rs 44.8 lakh crore now. In other words, in the last seven sessions, on an average, investor wealth has increased by Rs 1 lakh crore. And this is after BSE's market capitalisation declined by a little over Rs 1.1 lakh crore in Tuesday's sliding market.
An analysis of prices of group A and B stocks on BSE also showed that in those seven sessions, four stocks Kaushalya Infra, UB (Holdings), Jindal Capital and Evernnon Systems have at least doubled from where they were on May 15, the day before the poll results were out.
There are 1,410 stocks in BSE's A and B groups, of which 1,372 have given positive returns in the last seven sessions. Of these, 19 have given returns of 75% or more and 165 have returned of over 50%. On the other side of the spectrum, there are 38 stocks that gave negative returns, with three down over 10% in the last seven session. Among sensex stocks, Reliance Infrastructure, with a gain of 37.2% to Rs 1,123, tops the table. Among laggards were Bharti Airtel, TCS and Infosys.
(Source: TOI)
Tuesday 26 May 2009
Pranab Mukherjee says more stimulus needed for growth
NEW DELHI: The government is ready to deliver further fiscal stimulus to arrest a slowdown in growth, the finance minister said on Tuesday, but added that fiscal prudence was also a priority. Pranab Mukherjee said stimulus steps taken since late 2008, including cuts in duties and extra spending, were having an impact and the government would take further measures to revive activity, although some sectors such as textiles were badly hit. "What is needed right now is the stimulus to the growth. But at the same time, we cannot lose our sight, that we cannot indulge in fiscal profligacy," Mukherjee told a news channel when asked if more stimulus measures were planned. On Saturday, Mukherjee had said efforts would be made to insulate the economy from the global financial crisis and slowdown, and media reports have said the additional spending could be equal to 0.5-1.0 percent of gross domestic product. Finance Secretary Ashok Chawla told media finance ministry and Reserve Bank of India officials would meet on Saturday to finalise a revised borrowing plan for June, sending bond yields higher on concerns of more supplies. According to its borrowing calendar, the government is expected to borrow Rs 48000 crore ($10 billion) of bonds between May 29 and June 26.
(Source : ET)
(Source : ET)
Sunday 24 May 2009
Buy Nestle India: Motilal Oswal
Motilal Oswal has maintained its buy rating on Nestle India, in its report dated May 18, 2009.
“In 1QCY09, Nestle India reported 10.7% (11.8% excluding discontinued products) growth in domestic volumes and 25% decline in export volumes as against overall volume growth of 16.9% in CY08. The input costs environment is improving; prices of coffee (5% of sales), wheat (9% of sales) and palm oil (4.5% of sales) have declined by 17%, 3% and 7%, respectively over 1QCY09 though milk (15% of sales) and sugar (2% of sales) prices have increased by 3% and 14%. Lower input costs of wheat flour and palm oil will boost margins of the fastest growing SBU (Maggi Noodles).”
“We believe that resolution of strike at Pantnagar facility will limit the production loss due to pipeline inventory. Beverages will remain under pressure (Coffee exports decline and slowdown in consumption at call centers/BPO), although declining input costs can surprise on the margin front. Our current estimates factor in 30bp decline in gross margins and 60bp expansion in EBITDA margins. The stock trades at 24.7x CY09E EPS of Rs 70.4 and 20.4x CY10E EPS of Rs 85.3. Maintain Buy,” says Motilal Oswal’s report.
(Source: Moneycontrol)
“In 1QCY09, Nestle India reported 10.7% (11.8% excluding discontinued products) growth in domestic volumes and 25% decline in export volumes as against overall volume growth of 16.9% in CY08. The input costs environment is improving; prices of coffee (5% of sales), wheat (9% of sales) and palm oil (4.5% of sales) have declined by 17%, 3% and 7%, respectively over 1QCY09 though milk (15% of sales) and sugar (2% of sales) prices have increased by 3% and 14%. Lower input costs of wheat flour and palm oil will boost margins of the fastest growing SBU (Maggi Noodles).”
“We believe that resolution of strike at Pantnagar facility will limit the production loss due to pipeline inventory. Beverages will remain under pressure (Coffee exports decline and slowdown in consumption at call centers/BPO), although declining input costs can surprise on the margin front. Our current estimates factor in 30bp decline in gross margins and 60bp expansion in EBITDA margins. The stock trades at 24.7x CY09E EPS of Rs 70.4 and 20.4x CY10E EPS of Rs 85.3. Maintain Buy,” says Motilal Oswal’s report.
(Source: Moneycontrol)
Punj Lloyd – Market Performer
Punj Lloyd’s (PLL) current order book of Rs219bn, 2x trailing twelve months revenues, will be executed over the next year.
CMP Rs116, Target Rs122, Upside 5.2%
Punj Lloyd’s (PLL) current order book of Rs219bn, 2x trailing twelve months revenues, will be executed over the next year. This coverage ratio has been steadily declining from 3.1x in Q4 FY07 to 2x now. Its order inflow has also fallen steeply by 31% during Q3 FY09 to Rs22bn, despite higher bidding activities by the company. 18% of its order is facing slippages, which adds to our concerns on the stock. 33% of its order book is from the infrastructure segment followed by pipeline at 32% and process plants at 31%.
Slowing investment activities in infrastructure development in some of PLL’s key markets and segments raises concerns about future order book growth. We expect investments in the oil E&P to remain subdued over the next 12-18 months as crude prices are currently lower than the breakeven price for new projects. We expect PLL’s revenue and earnings growth will be restricted to 5% and 4% CAGR over FY09-11 respectively. We believe it trades fairly at 8.6x FY10E EPS. We initiate coverage with Market Performer and target price of Rs122.
See full report
CMP Rs116, Target Rs122, Upside 5.2%
Punj Lloyd’s (PLL) current order book of Rs219bn, 2x trailing twelve months revenues, will be executed over the next year. This coverage ratio has been steadily declining from 3.1x in Q4 FY07 to 2x now. Its order inflow has also fallen steeply by 31% during Q3 FY09 to Rs22bn, despite higher bidding activities by the company. 18% of its order is facing slippages, which adds to our concerns on the stock. 33% of its order book is from the infrastructure segment followed by pipeline at 32% and process plants at 31%.
Slowing investment activities in infrastructure development in some of PLL’s key markets and segments raises concerns about future order book growth. We expect investments in the oil E&P to remain subdued over the next 12-18 months as crude prices are currently lower than the breakeven price for new projects. We expect PLL’s revenue and earnings growth will be restricted to 5% and 4% CAGR over FY09-11 respectively. We believe it trades fairly at 8.6x FY10E EPS. We initiate coverage with Market Performer and target price of Rs122.
See full report
Saturday 23 May 2009
EDUCOMP (HDFC SECURITIES)
• Outlook and Valuation
We expect Educomp to record a revenue and net profit CAGR of 46.4% and 45.3% between FY09 to FY11. At the CMP, the stock is trading at a P/E of 24.7x and 18.7x our estimated EPS of Rs106.8 and Rs140.9 for FY10 and FY11. With a stable government geared to growth at the centre we expect sectors including Education will get a boost benefiting companies like Educomp. We continue to rate Educomp a ‘Marketperformer’ with a revised target price of 2,670. Though, we earlier valued Educomp at 22x of FY10 estimated EPS, we now value Educomp at 25x of its FY10E EPS of Rs106.8 as we believe the PE ratios of high growth companies in the education sector will expand faster due to the strong government at the centre.
To see full report: EDUCOMP
We expect Educomp to record a revenue and net profit CAGR of 46.4% and 45.3% between FY09 to FY11. At the CMP, the stock is trading at a P/E of 24.7x and 18.7x our estimated EPS of Rs106.8 and Rs140.9 for FY10 and FY11. With a stable government geared to growth at the centre we expect sectors including Education will get a boost benefiting companies like Educomp. We continue to rate Educomp a ‘Marketperformer’ with a revised target price of 2,670. Though, we earlier valued Educomp at 22x of FY10 estimated EPS, we now value Educomp at 25x of its FY10E EPS of Rs106.8 as we believe the PE ratios of high growth companies in the education sector will expand faster due to the strong government at the centre.
To see full report: EDUCOMP
Friday 22 May 2009
Weekly market update: records broken as market reacts well to political stability
This week is one which will be remembered for the breaking of two records in as many days as the markets reacted with exchuberance to the ending of weeks of political uncertainty.
The weeked announcement of the Lok Sabha election results caught most people totally off guard by returning a far more stable UPA government than had been previously anticipated by political or market analysts. As a result money poured into the markets as soon as they opened and before lunchtime on Monday the second upper circuit breaker had been breached for the first time and trading was suspended for the day after a 17% rise in both the benchmark indices.
Tuesday then saw another record broken as the cash segment witnessed the highest single day trading volumes since the exchanges opened. The pattern of the day saw FIIs buying heavily (net $1bn) while domestic funds booked profits with slightly more enthusiasm, resulting in a very minor downward correction following a day of huge volumes and volatility.
The remainder of the week was characterised by new money flowing into the markets being offset by large scale liquidations as investors booked profits. Declines on Wednesday and Thursday were followed by a a modest rally on Friday, led by infrastucture and banking stocks. The net effect of the dramatic week’s trading was that by close of play on Friday the Sensex stood at 13,887 up over 1,700 points or 14.4%. The Nifty ended the week on 4,232 after gaining 561 points or 15.2%.
Where the markets go from here is a big unknown as the election results was so unanticipated that the market seems to be still catching its breath.
The medium term prospects will of course depend on the budget and reform program which the new government announces, as well as global market developments. In the short term however there is a certain degree of concern (and rightly so) regarding whether current valuations are sustainable. On a P/E basis Indian markets are now more expensive than any of the other BRIC economies and this culd cause a temporary drying up of FII interest. Some analysts are already calling the top of the recent rally and while this may be premature there is certainly significant downside risk for the coming weeks.
The weeked announcement of the Lok Sabha election results caught most people totally off guard by returning a far more stable UPA government than had been previously anticipated by political or market analysts. As a result money poured into the markets as soon as they opened and before lunchtime on Monday the second upper circuit breaker had been breached for the first time and trading was suspended for the day after a 17% rise in both the benchmark indices.
Tuesday then saw another record broken as the cash segment witnessed the highest single day trading volumes since the exchanges opened. The pattern of the day saw FIIs buying heavily (net $1bn) while domestic funds booked profits with slightly more enthusiasm, resulting in a very minor downward correction following a day of huge volumes and volatility.
The remainder of the week was characterised by new money flowing into the markets being offset by large scale liquidations as investors booked profits. Declines on Wednesday and Thursday were followed by a a modest rally on Friday, led by infrastucture and banking stocks. The net effect of the dramatic week’s trading was that by close of play on Friday the Sensex stood at 13,887 up over 1,700 points or 14.4%. The Nifty ended the week on 4,232 after gaining 561 points or 15.2%.
Where the markets go from here is a big unknown as the election results was so unanticipated that the market seems to be still catching its breath.
The medium term prospects will of course depend on the budget and reform program which the new government announces, as well as global market developments. In the short term however there is a certain degree of concern (and rightly so) regarding whether current valuations are sustainable. On a P/E basis Indian markets are now more expensive than any of the other BRIC economies and this culd cause a temporary drying up of FII interest. Some analysts are already calling the top of the recent rally and while this may be premature there is certainly significant downside risk for the coming weeks.
Wednesday 20 May 2009
DR REDDY'S LABS (MERRILL LYNCH)
In good health; Rate Buy......
■ Reinstate coverage with Buy rating; 25% upside potential
We reinitiate coverage of Dr Reddy’s Laboratories (DRL) with a Buy rating and PO of Rs714. We forecast 20% EPS CAGR over FY09-11, and core EPS CAGR of 49%. At PO, stock would trade at 15x FY11E core EPS, which is a slight premium to peers. Near-term triggers include possible surprise on management guidance later this week, and likely launch of Omeprazole OTC in H2 FY10.
■ Forecast revenue to grow 11% annually
We expect growth in global generics (~70% of DRL) driven by new products and market share gains, and revamp of supply-chain (in India), even as our forecasts factor continuing pressure in EU (~13%). Based on management indication, we see upside risk to Para IV exclusivities/niche opportunities. In the PSAI segment (~30%), we expect API (ingredients to formulators) to maintain ~13% annual growth on DRL’s sizeable portfolio of filings, and focus on customs manufacturing (rather than slowing customs synthesis), to drive recovery towards 2H FY10.
■ Stable margin estimates, but may be conservative
Following an expected spike to 18.5% in FY09, we estimate margins at around 18%, restricted by our conservative revenue assumptions for high contribution opportunities with limited competition. However, we expect base margins to rebound around 30% (or 400bps) on improved revenue and mix to higher contributing markets, ie, Russia, US and India.
■ Valuations attractive in our view
Despite a 27% YTD stock rally, we believe valuations are attractive, given strong 49% core EPS CAGR, compared with domestic peers at 21% CAGR (consensus), as well as global counterparts (14% CAGR). On 2-year price to earnings growth (PEG), DRL trades at 0.3x, which is 60% discount to domestic peers.
To see full report: DR REDDY'S LABS
■ Reinstate coverage with Buy rating; 25% upside potential
We reinitiate coverage of Dr Reddy’s Laboratories (DRL) with a Buy rating and PO of Rs714. We forecast 20% EPS CAGR over FY09-11, and core EPS CAGR of 49%. At PO, stock would trade at 15x FY11E core EPS, which is a slight premium to peers. Near-term triggers include possible surprise on management guidance later this week, and likely launch of Omeprazole OTC in H2 FY10.
■ Forecast revenue to grow 11% annually
We expect growth in global generics (~70% of DRL) driven by new products and market share gains, and revamp of supply-chain (in India), even as our forecasts factor continuing pressure in EU (~13%). Based on management indication, we see upside risk to Para IV exclusivities/niche opportunities. In the PSAI segment (~30%), we expect API (ingredients to formulators) to maintain ~13% annual growth on DRL’s sizeable portfolio of filings, and focus on customs manufacturing (rather than slowing customs synthesis), to drive recovery towards 2H FY10.
■ Stable margin estimates, but may be conservative
Following an expected spike to 18.5% in FY09, we estimate margins at around 18%, restricted by our conservative revenue assumptions for high contribution opportunities with limited competition. However, we expect base margins to rebound around 30% (or 400bps) on improved revenue and mix to higher contributing markets, ie, Russia, US and India.
■ Valuations attractive in our view
Despite a 27% YTD stock rally, we believe valuations are attractive, given strong 49% core EPS CAGR, compared with domestic peers at 21% CAGR (consensus), as well as global counterparts (14% CAGR). On 2-year price to earnings growth (PEG), DRL trades at 0.3x, which is 60% discount to domestic peers.
To see full report: DR REDDY'S LABS
BANKING SECTOR (MF GLOBAL)
EXPECTATION BUILDS UP ON REFORMS IN BANKING SPACE
- The strong electoral mandate given to the UPA, would build up high expectation in terms of reforms in the banking space.
- The sentiment would turn positive, with expectation of faster and smoother implementation of reforms now compared to earlier tenure of UPA.
- The financial institution would play a pinotal role in the attempt to revive the economy. We believe that measures like re-capitalization of weak banks would expedite, as these banks need capital to expand. We view this as a positive development for the banking space, especially for the bank requiring re-capitalization, as this would enable them to enter the growth trajectory.
- Further measures like rise in FDI limit in Insurance sector; Relaxation of cap on holding more than 10% in bank by single entity; Permitting equity dilution without reducing the government's ownership below 51% would see positive development.
- We remain positive on banks like SBI, UBI & BOB. We also believe that the bank have a capital contraint showed do well given the possibility of re-capitalization exercise gaining momentum.
Tuesday 19 May 2009
Technical View - "Don't feel left out!"
Monday's maddening session has increased the left out feeling among several investors who were waiting on the sidelines fearing the worse from the general elections.
But, take heart. Investors need not feel left out as yet. We have identified four profitable trading ideas, which over the medium term could yield handsome returns. Investors may use corrections to accumulate these stocks.
± DCB – BUY between Rs28-33, Target Rs41, 44
± GTL Infra – BUY between Rs29-36, Target Rs43, 46
± Dish TV – BUY between Rs35-39, Target Rs50, 55
± Educomp Solutions – BUY between Rs2,620-2,750, Target Rs3,200
Investors became richers by Rs.6.50 Lakhs in a minute
Investors have become richer by a whopping Rs 6.5 lakh crore in just a minute as the Sensex saw a historic 2,111 point rise to the 14,000 level as the markets cheered the decisive win of the ruling UPA government in the Lok Sabha elections. Investor wealth, measured in terms of the combined market capitalization of all the listed companies, increased by over Rs 6,56,477 crore in a minute — in the first 30 seconds and then after the resumption of trading at 1155 hours — to Rs 44,63,420.97 crore.
Monday 18 May 2009
Three stock picks for three months
My top three picks with a time frame of around three months are :
Suzlon Energy – CMP 82.00
Target 1 : Rs.120 Target 2 : Rs.145.
Support : Rs.50.
Bombay Dyeing – CMP 280.00
Target 1 : Rs.345 Target 2 : Rs.400.
Support at Rs.165.
Aban Offshore – CMP 680.00
Target 1 : Rs.850 Target 2 : Rs.1100.
Support : Rs.390.
Suzlon Energy – CMP 82.00
Target 1 : Rs.120 Target 2 : Rs.145.
Support : Rs.50.
Bombay Dyeing – CMP 280.00
Target 1 : Rs.345 Target 2 : Rs.400.
Support at Rs.165.
Aban Offshore – CMP 680.00
Target 1 : Rs.850 Target 2 : Rs.1100.
Support : Rs.390.
Stock exchanges halt trading for the day - 18/05/2009
In the history of Indian Stock Market, first time ever, the stock indices - NSE & BSE both hit the upper circuit twice. In first fifteen seconds after opening, the Nifty hit its 15% upper circuit level and it was halted for a couple of hours. When trading resumed at 11.55 am, again in few seconds it was freezed and closed the day.
Today's Data:
BSE Sensex : +2,099 (17.24%) - Halted at 14,272
NSE Nifty : +637 (17.35%) - Halted at 4,308
Total Trade Turnover : Rs3,103 Crores (Cash + F&O)
Today's Data:
BSE Sensex : +2,099 (17.24%) - Halted at 14,272
NSE Nifty : +637 (17.35%) - Halted at 4,308
Total Trade Turnover : Rs3,103 Crores (Cash + F&O)
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