Indian stock market and companies daily report (February 14, 2012, Tuesday)

The domestic markets are expected to edge lower following weak opening across most of the Asian markets. With volatile spells, the domestic indices closed modestly higher yesterday. While better-than-expected results from SBI and easing concerns over Greece's debt concerns kept investors in an upbeat mood, profit taking after recent sharp gains capped the upside. Global cues remained mixed. European bourses ended with modest gains. Despite austerity measures approved by the Greek parliament, the concerns seem far from over for Greece, reflecting subdued interest in the markets. US bourses ended on a positive note, tracing developments in Greece.

On the domestic front, the corporate earnings season has fared satisfactorily so far, with no major negative surprises from the index heavyweights. In addition the macro indicators, especially inflation has trended lower in recent times, which has maintained positive vibe within the investors. Markets will closely track the monthly inflation numbers due to be released today. In addition, development across the eurozone will also offer directions to the bourses.

Markets Today

The trend deciding level for the day is 17,763 / 5,388 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,860 – 17,947 / 5,424 – 5,457 levels. However, if NIFTY trades below 17,763 / 5,388 levels for the first half-an-hour of trade then it may correct up to 17,676 – 17,579 / 5,354 – 5,318 levels.

IRB achieves financial closure for Ahmedabad Vadodara road project

IRB has achieved financial closure for its Ahmedabad Vadodara project by tying up of project finance of Rs.3,300cr. The total cost of this project is Rs.4,880cr, out of which equity contribution by the company will be ~Rs.1,580cr and remaining will be funded through project finance of Rs.3,300cr. Out of this project finance, ~Rs.1,100cr can be drawn as ECB and remaining Rs.2,200cr as Rupee Term Loan. The weighted average blended cost of this project finance is ~10.5% p.a. A Consortium of Lenders comprising of Infrastructure Development Finance Company Ltd (IDFC) - Lead Institution, India Infrastructure Finance Company Ltd (IIFCL), Andhra Bank, Punjab National Bank, Indian Overseas Bank, Bank of India, Union Bank of India and ICICI Bank Ltd have financed this project. With this, the company has achieved financial closure for all the projects awarded to it by NHAI and there is no project pending financial closure. This development is positive for the company as it has not only managed to achieve financial closure within the stipulated time period (management’s guidance February 2012) but also has been successful in bringing down the blended interest cost to ~10.5% p.a. We have arrived at an SOTP-based target price of Rs.182/share, which implies an upside of 7.7%. Hence, we recommend an Accumulate rating on the stock.

IVRCL Group bags orders worth Rs.1,430cr

IVRCL Group has bagged orders aggregating to Rs.1,430cr across various segments. IVRCL Assets and Holdings Ltd., a subsidiary of IVRCL, bagged a road project (151km) connecting Rajasthan border and Haryana worth Rs.1,202cr. The project will be executed as BOT (toll) project and has been awarded by the Government of Haryana. The concession period is 20 years and the construction period is 30 months. For the balance orders, IVRCL's water, transportation and buildings divisions have bagged orders valued at Rs.111.1cr, Rs.71.9cr and Rs.45.1cr, respectively. Owing to the recent run-up (~58% in one month) in the stock price, we recommend Neutral on the stock.

3QFY2012 - Result Reviews

Coal India

Coal India’s 3QFY2012 sales were below our expectations; however, net profit beat our estimates on account of lower-than-expected staff cost and higher-thanexpected other income. Coal India’s 3QFY2012 net sales increased by 21.0% yoy to Rs.15,349cr (below our estimate of Rs.17,664cr) primarily due to higher average realization. Blended average realization on coal sales increased by 21.2% yoy to Rs.1,392/tonne; however, offtake stood flat yoy at 110mn tonnes. Production grew by 1.4% yoy to 115mn tonnes. EBITDA per tonne increased by 40.9% yoy to Rs.442 in 3QFY2012 on account of higher realization. The company’s EBITDA increased by 40.6% yoy to Rs.4,875cr, representing EBITDA margin of 31.8%. Other income grew by 48.4% yoy to Rs.1,856cr on account of higher cash balance and increased treasury yield. The company reported exceptional loss of Rs.5cr in 3QFY2012 and gain of Rs.12cr in 3QFY2011. Adjusted net income grew by 53.5% yoy to Rs.4,043cr (above our estimate of Rs.3,650cr). Considering the company’s 9MFY2012 production of 291mn tonnes, it is unlikely to meet its FY2012 production target of 440mn tonnes in our view. Further, we believe infrastructural bottlenecks are likely to result in modest sales volume growth during FY2012. We maintain our Neutral view on the stock.

State Bank of India

For 3QFY2012, SBI registered a net Profit growth of 15.4% yoy to Rs.3,263cr, which were above street estimates. The bank continued to impress on the net interest income front, registering a growth of 26.7% (up 10.0% qoq) yoy to Rs.11,466cr. The reported global NIMs of the bank improved sequentially by 26bp to 4.05%. The non-interest income of the bank declined by 35.8% yoy to Rs.2,126cr, primarily on account of sale of loss-making investments (Rs.1,090cr) during the quarter. However, the benefit also resulted in write back of provisions of Rs.867cr during 3QFY2012, which led to overall provisions increasing by a relatively smaller 17.3% yoy to Rs.2,407cr. The loan-loss provisioning though was higher at Rs.3,006cr , an increase of 84.2% yoy over Rs.1,632 levels registered in 3QFY2011.

The asset quality continued to disappoint with gross and net NPA levels increasing by 18.1% and 16.6% qoq, respectively. As of 3QFY2012 gross NPA ratio stands at 4.6% (4.2% in 2QFY2012), while net NPA ratio stands at 2.2% (2.0% in 2QFY2012). The provisioning coverage ratio deteriorated by 98 bp during 3QFY2012 to 62.5%. Currently, we have an accumulate rating on the stock with a target price of Rs.2,364.

Sun Pharmaceuticals

For 3QFY2012, Sun Pharmaceuticals posted higher-than-expected results. The company’s net sales and net profit came in at Rs.2,145cr and Rs.668cr, respectively. This translates into growth of 37% yoy and 12% on the top-line and bottom-line fronts, respectively. Net profit growth, however, came in lower than expected on account of forex losses of Rs.86.3cr. Adjusted for the same, net profit growth was much higher than expected. Key highlights of the quarterly numbers were growth in the U.S. business, which grew by 47% yoy. Domestic formulation, on the other hand, grew by 17% yoy. On the operating front, OPM came in at 45% in 3QFY2012 vs. 41.4% in 3QFY2011. We maintain our Neutral recommendation on the stock.

SAIL

SAIL’s 3QFY2012 net sales were below our estimates; however, adjusted PAT came in-line with our estimates. The company’s 3QFY2012 net sales decreased by 4.9% yoy to Rs.10,594cr (below our estimates of Rs.12,239cr) mainly due to lower sales volumes (-19.4% yoy to 2.6mn tonnes), partially offset by increase in realizations (+17.9% yoy to Rs.40,435/tonne). Raw-material cost and other expenditure (surprisingly) decreased by 10.6% and14.0% yoy to Rs.4,736 and Rs.762cr, respectively, while power and fuel cost increased by 27.1% yoy to Rs.1,128cr. EBITDA dipped by 10.3% yoy to Rs.1,581cr and EBITDA margin contracted by 89bp yoy to 14.9% (higher than our estimate of 14.0%). EBITDA/tonne decreased by 1.2% yoy to US$119 during the quarter. The company reported an exceptional item related to forex loss of Rs.466cr in 3QFY2012, compared to exceptional gain of Rs.33cr in 3QFY2011. Hence, PAT decreased by 42.9% yoy to Rs.632cr. However, excluding exceptional items, adjusted PAT grew by 2.2% yoy to Rs.1,098cr (in-line with our estimate of Rs.1,083cr) during 3QFY2012. The stock is under review currently.

Cipla

For 3QFY2012, Cipla posted net sales and net profit of Rs.1,735cr and Rs.269.1cr. While net sales came in higher than expected, net profit was marginally lower than expected. This was mainly on account of lower-than-expected OPM, which expanded by 246bp yoy to 20.2% vs. our expectation of 21.8%. Margin was mainly impacted on the back of 38.8% yoy growth in 3QFY2012. We remain Neutral on the stock.

Motherson Sumi Systems (MSS)

Motherson Sumi Systems (MSS) registered a strong 25% yoy growth in consolidated top line to Rs.2,690cr (adjusted for Peguform acquisition) led by 35.8% yoy growth in SMR revenue. SMR performance during the quarter benefitted from increasing utilization from the new plant at Hungary (US$12mn to the consolidated top-line). Domestic growth (up 1.4% yoy) was however muted due to disruption in production at its major clients, namely, Maruti Suzuki and Honda. During 3QFY2012, MSS consolidated the results of Peguform which reported a top-line of Rs.1,151cr.

On the operating front, consolidated margins declined 479bp yoy to 6.7% largely due to consolidation of Peguform which has lower operating margins compared to the standalone entity and SMR. Operating margins at SMR and standalone level improved sequentially led by improving utilization levels and easing of rawmaterial cost pressures. MSS posted a net loss of Rs.25cr for 3QFY2012 on account of forex loss (Rs.80cr) and various one-time expenses. During 3QFY2012, MSS incurred a Rs.78.9cr one-time cost related to Peguform acquisition and Rs.4.5cr towards goodwill write-off (Vacuform acquisition). We shall revise our numbers and come up with a detailed result note soon. The stock rating is currently under review.

Areva T&D – 4QCY2011 Result Review

Areva T&D India (now Alstom T&D India Ltd) reported its 4QCY2011 numbers. For 4QCY2011, the company reported revenues of Rs.683.3cr with EBITDA margin of 8.3% and PAT of Rs.30.2cr. However, it is pertinent to note that the numbers do not include the results of the Distribution business (de-merged business now operating under Schenider Electric Infrastructure Ltd). Hence, the results are not comparable against our estimates. We await more information and clarity on the de-merged operations post which we will revise our estimates and recommendation for Areva T&D. The stock is temporarily suspended from our coverage.

Amara Raja Batteries

Amara Raja Batteries (AMRJ) posted an impressive 44.1% yoy (9.1% qoq) growth in its top-line to Rs.613cr. The top-line growth was led by strong double digit volume growth in the industrial (telecom and UPS) and automotive (replacement) battery segments. During 3QFY2012, operating margins witnessed a 130bp yoy (165bp qoq) expansion to 17.3% led mainly due to 240bp and 110bp yoy contraction in other expenditure and staff costs. Raw-material cost as a percentage of sales however, increased by 220bp yoy mainly due to increase in lead prices. Led by strong operating performance and significant increase in other income, net profit registered a substantial 66.3% (27.1% qoq) growth to Rs.66cr. Due to strong performance in 3QFY2012, we have revised our earnings estimates upwards for FY2012/13E by 20.6%/19.4% due to upward revision in top-line and operating margins. After the recent run-up in the stock price (~35% in last one month) the stock is trading at 9.7x FY2013E earnings. We recommend Accumulate on the stock with a revised target price of Rs.299.

CESC

During 3QFY2012, CESC reported 10.6% yoy growth in its standalone net sales to Rs.1,019cr, aided by minimal 3.3% yoy increase in volumes to 2,005MUs and 7.1% yoy improvement in realizations. The OPM’s for the company contracted by 589bp yoy to 19.6% impacted by higher power and fuel costs and billing to customers on old tariff, as tariff order for FY2011-12 is still awaited. Further with the new tariff order still pending, the company had charged provisions. However, these provisions could be reversed on obtaining the order. Thus, the company’s bottom-line came in at Rs.74cr, down by 32.7% yoy well below our estimates. We maintain our Accumulate recommendation on the stock with a Target Price of Rs.304.

Punj Lloyd

For 3QFY2012, Punj posted 27.5% yoy top-line growth to Rs.2,701cr. The company’s EBITDA margin for the quarter stood at 0.5% against 4.5% in 3QFY2011. Interest and depreciation came in at 137.2cr and Rs.89.2cr respectively. However, on account of other income of Rs.319.5cr Punj reported profit of Rs.70.3cr against a loss of Rs.62.1cr in 3QFY2011 on the earnings front. Order inflow for Punj Lloyd in 9MFY2012 was Rs.12,364cr against Rs.9,978cr in FY2011 with an order backlog of Rs.28,270cr (3.6x FY2011 revenue). We maintain our Neutral view on the stock.

Madhucon Projects

For 3QFY2012, Madhucon Projects (MPL) reported decent set of numbers, higher than our and street expectations. On the top line front MPL posted stellar performance with yoy growth of 77.5% to Rs.624.9cr, way above our expectations of Rs.436.8cr and consensus estimate of Rs.392.0cr. OPM stood at 8.4% posting a steep dip of 430bps against our expectations of 11.4%. Interest cost stood at Rs.29.8cr a jump of 93.5% on yoy basis but a decline of 6.4% on a sequential basis. On the earnings front, the company posted a decline of 34.5% on yoy basis at Rs.7.5cr against our expectations of Rs.1.8cr (consensus Rs.5.4cr). We maintain Buy on the stock with target price of Rs.77.

3QFY2012 - Result Previews

Tata Motors

Tata Motors (TTMT) will be announcing its 3QFY2012 results today. On a consolidated basis, we expect the company’s top line to grow by a strong 34% yoy to Rs.42,221cr driven by a robust 37% yoy growth in JLR volumes. On the operating front, EBITDA margin is expected to contract by 235bp yoy to 11.8% due to cost pressures and decline in realization because of the Evoque. As a result, the bottom line is expected to grow by a modest 5.6% yoy Rs.2,560cr. The stock rating is under review.

JP Associates

We expect Jaiprakash Associates (JAL) to post modest top-line growth of 12.1% yoy to Rs.3,304cr for the quarter. We expect flat E&C revenue at Rs.1,264cr. On the cement front, we expect JAL to post revenue of Rs.1,543cr – volume of 4.7mt with realization of Rs.3,250/tonne for the quarter. The real estate sector is expected to post top-line growth of 5.0% yoy to Rs.446.8cr.Overall, we expect JAL to post OPM of 21.2%, down 749bpyoy, on account of abysmal OPM of 11.0% expected in the cement segment. The bottom line is expected to come in at Rs.69.5cr, registering a yoy decline of 70.1% for 3QFY2012. We recommend an Accumulate on the stock with an SOTP target price of Rs.88.

IVRCL

For 3QFY2012, we expect IVRCL to post a 3.0% yoy decline in its revenue to Rs.1,374cr. On the EBITDA margin front, we expect a 70bp yoy dip to 9.2%. On the earnings front, we expect a steep decline of 46.5% yoy to Rs.22.6cr, primarily due to higher interest costs for the quarter and a decline in the top line. Owing to the recent run-up (~58% in one month) in the stock price, we recommend Neutral on the stock.

Simplex Infra

For Simplex, we project decent top-line growth of 15.7% yoy to Rs.1,348cr for 3QFY2012. We expect EBITDA margin to remain under pressure at 8.6%, given its exposure to foreign currency loans. Therefore, the bottom line is expected to be under pressure due to increased interest cost (yoy expected jump of ~50.0%), resulting in a yoy decline of around 41.4% to Rs.13.6cr for the quarter. We maintain a Buy on the stock, with a Target Price of Rs.233.

Economic and Political News
- US $ 500bn stashed by Indians in banks abroad: CBI
- US $ 300bn export target is achievable this fiscal: DGFT
- Government to sell stake in ONGC, BHEL to raise Rs.14,500cr in FY2012
- Centre for 6% road tax on cars, two-wheelers

Corporate News
- RBI to meet banks soon on issue of rising bad loans
- HCL Tech bags infra management contract with Statoil
- Muthoot Finance to raise Rs.500-cr via public issue of NCDs
- Oil companies seek compensation for losses on petrol

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Indian stock market and companies daily report (January 04, 2012, Wednesday)

Indian markets are expected to open in the green following positive cues from the European markets and the Asian markets. Asian stocks trading in the green after U.S. manufacturing increased at the fastest pace in six months. Indian shares rallied on Tuesday as inflation worries seem to be abating and the Reserve Bank of India said it might ease monetary policy to address concerns about economic growth.
The US markets ended in the green as markets benefited from positive reactions to the latest batch of economic data. The early rally on Wall Street was partly due to the release of a report showing a modest rebound in Chinese manufacturing activity in the month of December. A separate report showing a notable drop in German unemployment also generated some buying interest. Stocks saw continued strength following the release of a report from the Institute for Supply Management showing that its index of activity in the U.S. manufacturing sector rose to a six-month high in December.

Markets Today
The trend deciding level for the day is 15,850/4,738 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,060 – 16,180/4,800– 4,835 levels. However, if NIFTY trades below 15,850/4,738 levels for the first half-an-hour of trade then it may correct up to 15,730 – 15,520/4,703 – 4,641 levels.

Cement Dispatches – December 2011
Ambuja Cements’ dispatches stood at 1.93mn tonnes for December 2011, up by modest 5.7% yoy on a high base of last year. For CY2011, the company’s dispatches grew marginally by 4.2% to 20.96mn tonnes. During CY2010, the company added 2mtpa of capacity, post which its overall capacity stands at 27mtpa. We continue to remain Neutral on Ambuja Cements.

Reliance Industries gets nod to develop new D6 fields
The government has approved Reliance Industries' US$1.5bn plan to develop the new D6 block, which has the potential to produce additional 10mmscmd gas. RIL and, its partner, BP have four months to start work on the project as the KG D6 block faces adverse weather during the rest of the year. Until further clarity on the anticipated production from the block, we maintain our estimates and maintain our Buy rating on the stock with a target price of Rs.1,006.

HCC bags order worth Rs.289cr
Hindustan Construction Company (HCC) has received a Letter of Acceptance (LOA) for a Rs.289cr contract to construct a bulk water transmission system for  Gujarat Water Infrastructure Limited, a Government of Gujarat Undertaking. The work involves construction of a 57km-long water transmission pipeline between Dhanki and Maliya villages under the Swarnim Gujarat Saurashtra-Kutch, Water Grid Programme. The project will be completed in 12 months. With this order, HCC’s outstanding order book now stands at ~Rs.16,967cr (4.1x FY2011 revenue). We maintain our Neutral view on the stock.

Economic and Political News
- DoT to demand Rs.1,593cr from companies for under-reporting revenue
- Government may okay Rs.300cr for marketing support to MSMEs
- Union Budget to be presented on March 16, 2012
- Companies Bill may be cleared in Budget session: Law Minister

Corporate News
- RIL to fund Network 18’s Eenandu stake buy
- IDFC to raise upto Rs.4,500cr via infra bonds
- Bajaj Auto unveils its first-ever four-wheeler, RE60, in New Delhi
- Suzlon Energy bags order to supply 57 wind turbines in the U.S.

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Indian stock market and companies daily report (January 03, 2012, Tuesday)

Indian markets are expected to open in the green following positive cues from the European markets and the Asian markets. Asian stocks rose as manufacturing growth from Australia, China and India added to optimism that the region’s economies will withstand Europe’s unresolved sovereign debt crisis. Indian shares ended a choppy session modestly higher on Monday after the government said it would allow qualified foreign investors direct access to Indian stock markets from January 15. While the manufacturing PMI for India jumped to a six month high of 54.2, cheering investors, slowdown in exports to 3.9% yoy for the month of November restricted major upside movement in domestic equities. European stocks though kicked off the New Year in style on Monday, as the markets open for business rallied on hopes that 2012 will bring an end to the region's sovereign debt crisis. Also, German factory sector contracted less than initially estimated in December which led to further gains for European markets on Monday.

Markets Today

The trend deciding level for the day is 15,473/4,624 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 15,588 – 15,658/4,659 – 4,681 levels. However, if NIFTY trades below 15,473/4,624 levels for the first half-an-hour of trade then it may correct up to 15,403 – 15,288/4,601 – 4,566 levels.

Auto sales update – December 2011

Maruti Suzuki (MSIL)

MSIL registered a 7.1% yoy (flat mom) decline in overall volumes to 92,161 units, led by weak performance in domestic markets. Domestic performance during the month witnessed a 13.4% yoy (6.5% mom) decline to 77,475 units, primarily due to subdued demand for passenger cars. Export volumes, however, overshadowed the weak domestic performance, as it recorded impressive 50.5% yoy (65% mom) growth to 14,686 units. The mini segment registered a decline of 15.6% yoy (flat mom), while the compact segment posted flat yoy (6.8% mom) growth. Production during the month was impacted, as the company’s plants were shut for six days in December on account of annual maintenance.

Hero MotoCorp (HMCL)

HMCL reported in-line growth of 7.8% yoy (0.7% mom) in total volumes to 540,276 units. New product launches and refreshed product ranges continued to support HMCL’s volume momentum across product segments. Management has indicated that it further intends to consolidate the company’s leadership position with new product launches and network expansion.

Bajaj Auto (BJAUT)

BJAUT posted lower-than-expected volumes for December 2011, led by moderate growth in the motorcycle segment. Total volumes recorded modest growth of 10.4% yoy (18.4% mom decline) to 305,690 units, primarily due to weak 8.2% yoy (substantial fall of 20.6% mom) growth in the motorcycle segment. Three-wheelers, on the other hand, sustained their strong momentum, reporting 26.8% yoy (down 1.2% mom) growth. Exports also maintained their growth trajectory, witnessing growth of 25.5% yoy (down 7.4% mom) in December 2011.

TVS Motor (TVSL)

TVSL reported poor numbers for December 2011, as total volumes declined by 0.8% yoy (2.9% mom) to 170,428 units. The weak performance can be attributed to slowdown in TVSL’s motorcycle segment, which declined by 7.7% yoy (9.5% mom). The scooters and mopeds segments also witnessed moderate growth of 7.2% (1.1% mom) and 2% yoy (flat mom), respectively, in December 2011. Three-wheeler volumes during the month fell steeply by 26.5% yoy (6.8% mom) to 2,523 units.

Govt. raises export duty on iron ore; Sesa Goa to be the worst hit

The government has raised export duty on iron ore to ad valorem 30% on lumps and fines, with effect from December 30, 2011, compared to 20% earlier. Iron ore exports from India have already declined by 25.2% to 35.4mn tonnes from April- October 2011 on account of export ban in Karnataka, stringent measures in issuing export permits in Odisha, a sharp decline in international iron ore price  and increased export duty. Post the export duty hike, rise in rail freight and the recent iron ore price decline are expected to severely affect iron ore exports from India. Before the export duty hike (as per Federation of Indian Mineral Industries), total iron ore exports during FY2012 were estimated to be 60mn tonnes compared to its previous estimate of 75.0mn tonnes. We now expect iron ore exports to be lower than 60mn tonnes during FY2012.

We do not expect any impact on NMDC’s financials due to hike in export duty, as we do not anticipate any exports of iron ore by NMDC during FY2012 and FY2013. However, we have lowered Sesa Goa’s EBITDA estimates for FY2012 and FY2013 by 8.1% and 9.1% to Rs.3,314cr and Rs.3,712cr, respectively. Also, we believe some of the Karnataka iron ore would now be sold domestically. Nevertheless, we believe the current stock price discounts negatives such as acquisition of a minority stake in the unrelated oil business via acquisition of Cairn India’s stake, increased export duty, higher railway freight and lower volumes from Goa mines. We recommend Buy on the stock with an SOTP-based target price of Rs.195 (Rs.213 earlier).

L&T bags orders worth Rs.2,056cr

Larsen & Toubro's (L&T) construction arm has bagged new projects worth Rs.2,056cr across various categories in December 2011. Of these projects, two orders worth Rs.1,262cr in the water and effluent treatment segment was bagged by the company. In the buildings and factories category, a project worth Rs.388cr was bagged for constructing residential towers. In the rail infrastructure segment, orders aggregating to Rs.406cr have been grabbed from various clients. With these orders, the company’s outstanding order book stands at ~Rs.1,52,609cr (3.5x FY2011 revenue), providing good revenue visibility. This order booking takes the company’s total declared orders to ~Rs.10,420cr in 3QFY2012 against orders worth Rs.13,336cr received in 3QFY2011. The drying up of order inflows is one of the major concerns for the stock and has led to underperformance in the recent past.

At the CMP of Rs.1,009, the stock is trading at PE of 9.7x FY2013E earnings, after adjusting for investments, which is below the historical trading multiple for L&T and we believe factors in most of the negatives surrounding the stock. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in the different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,453, which provides 44.0% upside from current levels. Hence, we maintain our Buy recommendation on the stock.

IVRCL bags orders worth Rs.732cr

IVRCL has bagged orders aggregating to Rs.732cr across the buildings, transportation, mining, water and solar power divisions. The company’s buildings division has secured orders worth Rs.404.6cr, including those from the Indian Institute of Science Education and Research, Bhopal; Indian Oil Corporation Ltd.; Jindal Steel & Power Ltd.; and National Institute of Biomedical genomics, West Bengal. While the transportation division secured an order worth Rs.251.4cr from Mahanadi Coalfields Ltd., the mining division bagged an order worth Rs.45.4cr from Hindustan Copper Ltd. Further, orders worth Rs.19.4cr and Rs.11.4cr have been bagged for water and solar power projects, respectively. With these orders, IVRCL’s order book stands at ~Rs.26,232cr (4.6x FY2011 revenue).

We have valued IVRCL on an SOTP basis. The company’s core construction business is valued at P/E of 6x FY2013E EPS of 4.6 (Rs.27.8/share), whereas its stake in subsidiaries, IVR Prime (Rs.10.9/share) and Hindustan Dorr-Oliver (Rs.2.9/share), has been valued on mcap basis, post assigning a 30% holding company discount. At the CMP of Rs.29, the stock is trading at 6.3x FY2013E EPS and 0.4x FY2013E P/BV on a standalone basis. Thus, on the back of the company’s robust order book-to-sales ratio (4.6x FY2011 revenue) and attractive valuations, we maintain our Buy view on the stock with a target price of Rs.42.

Economic and Political News
- November exports rise 3.9% to US$22.3bn yoy
- November imports rise 24.5% to US$35.9bn yoy
- No outside control must be imposed on media: PM

Corporate News
- ONGC to invest Rs.15,000cr in KG gas find
- Coal India expects higher revenue to offset wage hikes
- M&M tractor sales for December 2011 rise marginally

Share Market Update on Federal Bank for 1QFY2012

Share Market Update on FederalBank for 1QFY2012 with a Buy recommendation and a Target Price of `478 (12 months).

For 1QFY2012, Federal Bank recorded net profit growth of 10.8% yoy (down 14.9% qoq), below our estimates, mostly due to higher provisioning expenses than built in by us. Management has attributed the rise in NPAs (slippages at `323cr) during the quarter to one-off employee-related issues, which led to a spurt in slippages in the retail book. Fee income according to management also suffered due to this one-off event. We recommend a Buy rating on the stock.

CASA ratio improves; however, asset-quality woes continue: For 1QFY2011, advances grew by 0.1% qoq to `31,972cr, while deposits declined by 0.2% qoq to `42,936cr. Although total deposits declined during the quarter, the bank was able to sequentially grow its savings and current account deposits by 3.5% and 4.2%, respectively, leading to a 96bp increase in CASA ratio to 27.2%.  Including NRE deposits, total low-cost deposits constituted 32.8% of total deposits. Cost of deposits increased by 103bp qoq, leading to a 13bp qoq decline in reported NIM to 3.9%. Slippages for 1QFY2012 stood at `343cr (annualised 4.0%), driven by higher slippages on the retail (~`140cr) and SME (~`140cr) front. Management has attributed the increase in slippages on the retail side to one-off employee-related issues that cropped up during the quarter, leading to slackness on the recovery front. During 1QFY2012, non-interest income declined by 17.2% qoq (up 6.4% yoy), mainly due to sluggishness in fee-related initiatives and recoveries on the retail side (recoveries were down by 42.6% qoq), as per management.

Outlook and valuation: Post the recent correction, the stock is trading at 1.1x FY2013E ABV. While lower leverage is leading to low RoE at present, the bank’s core RoA is relatively high and should improve further as asset-quality pressures start moderating. We recommend Buy on the stock with a target price of `478.

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2. Understand you risk tolerance level or how much risk you can take? Make investment in equity market based on your risk capacity.



3. Don’t wait for a correction to enter the market. More money is lost is waiting for market corrections to happen than in market corrections.



4. Do not panic when the equity market falls. Equity markets follow a cyclical trend and are influenced by many factors. The fundamentals and future prospects of the company do not change just because market undergoes a correction.



5. Be disciplined in equity trading. Create individual stop loss levels for all your equity investments based on the volatility of the stock. When the stop loss levels are hit, sell the stock instead of averaging it out at lower levels.



6. Don’t keep dud stocks in your portfolio in the hope that they will go up one day. Cut your losses and move ahead. Invest in some other stocks which will give you a better return in the same time frame.



Stick to these rules and invest smartly in the equity market!

Trade conveniently in stocks with Angel Broking

Stock market is the unarguably the best way to build wealth in the long term. But, investors shy away from stock market as they perceive stock markets to be risky. However, it is very easy to invest in the stock market. Contrary to the popular belief, you do not need lakhs to invest in stock market. You can start with a minimal amount and invest regularly in stocks to build a strong portfolio in the long term.
To invest in stocks, you need to have a Demat and Trading Account. If you have an Online Trading Account, stock investing becomes simpler. Just log on to your Online Trading Account and you can buy and sell shares in an instant, without relying on anyone else!
Angel Broking is the top retail broking house in India offering equities, derivatives, commodities, mutual funds, PMS, advisory services, IPO, life insurance, demat services.
Angel Broking has various trading platforms to optimize your trading experience. Angel Diet is for day traders who want the power of terminal trading on their desktop. Angel Trade is for investors who want easy and secure online trading from anywhere. Angel Investor is for investors who want to trade online in proxy and firewall environment like office and cybercafé. Angel Swift is for investors who want to trade from mobile. Angel Lite is for investors who want an ultra-low bandwidth site that works on slow internet connections.
Angel Broking also provides free training to operate the trading platforms. Stock investing is indeed easy with Angel Broking!

Become a sub-broker

Do you find stock market interesting? Do you have an entrepreneurial spirit and want to be your own boss? If yes, then join Angel Broking and be a part of the largest network of sub-brokers in India.

Angel Broking is among the top stock broking and wealth management companies in India. It offers equity trading, commodities, PMS, mutual funds, life insurance, personal loans, IPO and depository services. It has the largest distribution network in India with presence in more than 950 cities across India. The burgeoning network of sub-brokers is the back-bone of Angel Broking.

Angel Broking provides undaunted support and guidance to its sub-brokers. It empowers the sub-brokers by providing them technological, sales and research assistance.  It also conducts special training programs on a regular basis to develop their business skills and keep them abreast of what is happening in the market.

Make your business dreams come true now! Click here to become a sub-broker of Angel Broking.