BIG BOSS
VIKAS PARSHURAM SAMWATSARE

SHORT TIME AND LONG TIME  STOCK MARKET TIPS



Buy Zee Entertainment Enterprises Ltd For Target Rs.273


We initiate coverage on Zee Entertainment Enterprises Ltd (ZEEL) as a BUY with a Price Objective of `273. At CMP of `184, the stock is trading at 26.3x and 18.4x its estimated earnings for FY13 & FY14 respectively, representing a potential upside of ~48% over a period of 24 months. Expected surge in subscription revenues due to the new digitization reforms, higher than expected ad-revenue growth and enhanced reached from the Media Pro venture should help revenues grow at a CAGR of 15.7% to `4,711.3 crore by FY15 from the current FY12 revenues of 3,040.5 crore. Further, sharp decline in carriage costs going forward and curtailed losses on the sports business should help lift margins and improve earnings to `1,296.8 crore from the current `589.2 crore over the forecast period FY13-15 (CAGR of 30.2%).
 Digitisation to provide fillip to ZEEL’s subscription revenues
As reported subscriber numbers increase post digitization, subscription revenues of the broadcasters are also expected to increase substantially. Given ZEEL’s superior domestic subscription revenue share (as compared to peers), ZEEL is expected to be one of the biggest beneficiaries. We expect ZEEL’s domestic subscription revenue to grow at a CAGR of 31.4% to `2,090.5 crore in FY15 from `922.2 crore in FY12 on the back of better content quality and optimized content distribution through Zee Turner and MediaPro (its distribution ventures). Moreover, we expect international subscription revenues to aid top line and grow steadily at a CAGR of 2.8% to `437.4 crore from `402.2 crore over the period of FY12 to FY15 on the back of enhanced investments to improve the quality of content besides launching channels with local flavor. Lastly, ZEEL’s carriage fees is set to crash, albeit in a phased manner, to `108.9 crore (3.7% of total cost) over the period of 3 years till FY15 from the current `211.6 crore on the back of continued synergy from its distribution venture and elimination of demand-supply mismatch (increase in channel carrying capacity from ~90 to ~600 channels).
Valuation
We initiate coverage on Zee Entertainment Enterprises Ltd (ZEEL) as a BUY with a Price Objective of `273 representing a potential upside of ~48% over a period of 24 months. At CMP of `184, the stock is trading at 26.3x and 18.4x its estimated earnings for FY13 & FY14 respectively. Historically, the stock has traded at an average of 20.7x one year forward earnings and we expect ZEEL to command similar multiples going ahead and accordingly we have valued ZEEL at 20x to FY15 EPS.
Expected surge in subscription revenues due to the new digitization reforms, higher than expected ad-revenue growth and enhanced reached from the Media Pro venture should help revenues grow at a CAGR of 15.7% to `4,711.3 crore by FY15 from the current FY12 revenues of `3,040.5 crore. Further, sharp decline in carriage costs going forward and curtailed losses on the sports business should help lift margins and improve earnings to `1,296.8 crore from the current `589.2 crore over the forecast period FY12-15 (CAGR of 30.2%).

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 Buy Tv Today For Target Rs. 88 94 & 100 



The stock has been in a long term downtrend since Dec’08 forming a series of lower highs and lows.
* The counter at the lower support range near its previous Nov’08 lows formed a Complex Bullish Inverted Head & Shoulder pattern and has managed to give a bullish breakout. The right shoulder formed multiple higher lows which hinted for an upside breakout.
* The RSI indicator has exceeded the ascending triangle pattern which confirms a trend reversal and possibility for the prices to test the upper resistance line in the medium term.
* There was series of positive divergence observed in RSI which indicated an impending trend reversal on cards. The MACD in daily chart after a positive divergence in histogram gave a bullish crossover which formed the Head of the Pattern. Both the momentum indicators suggested a rally which got confirmed from the pattern breakout.
* As a major reversal pattern, the Head and Shoulders Bottom forms after a downtrend, and its completion marks a change in trend. The RSI has managed close above resistance of 60 levels which has indicated a bullish range shift.
* The counter has also managed to close decisively above the 23.6% retracement level after 2011 which is bullish.
* The advance off the right shoulder observed a large expansion of volumes. The strength behind the move indicated that a significant low has been formed. The advance from the right shoulder occurred with big candle accompanied with above average volume which validates the bullish breakout.





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• BIG BOSS VIKAS PARSHURAM SAMWATSARE

 DATED 26/09/2012 

STOCK MARKET TIPS

INDIAN STOCKS MARKET ANALYSIS, AND INVESTMENTS ADVISER. I GIVE STOCK PICKS, IDEAS FOR THE VALUE INVESTOR, MARKET ANALYSIS, INFORMATION. I AM MASTER ON NIFTY CALL AND PUT CALLS.

. BUY - Union Bank of India Target 206, 209, 212.00 SL 198.00
BUY – HDIL Target 95.50, 97.50 SL 90.00
BUY - MRF Limited Target 10300, 10390, 10450 SL10050.00
BUY - Bajaj Auto Limited Target 1805, 1820, 1835.00 SL 1760.00
BUY - Hindustan Petroleum Corporation Limited Target 308, 309.50 SL 303.00
BUY - Indian Overseas Bank Target 79, 79.60 SL 77.00
BUY - Exide Industries Limited Target 146.50, 148.00 SL 142.00
BUY - Hindustan Petroleum Corporation Limited Target 308, 310,312.00 SL 304.00
BUY - Dr. Reddy's Laboratories Limited Target 1660,1665,1680 SL 1640.00
BUY - Aditya Birla Nuvo Limited Target 891, 900, 910 SL 870.00 

 

Profit booking pressure saw on Market. BSE Sensex higher 21 points to closed at 18 694 and Nifty closed at 5674 with up 4 points. There was small and midcap stocks also strong. Nifty Midcap rose 0.5% and BSE Smallcap 0.25%. Realty and FMCG stocks rose by 2%. Consumer Durables, Healthcare, Power, Capital Goods stocks was faster 0.75 to 0.35%. IT, Banks, Tech stocks are light strong. Metal shares Broken 1.5%. Auto, PSU, Oil and Gas stocks ended lower by 0.75 to 0.25%.

Intraday Tips for tomorrow 26 September

SKS Microfinance buy target – 128 – 131, Stoploss – 118.

GIC Housing Finance buy target – 110 – 114, Stoploss – 98.

બીગ બોસ્સ  વિકાસ ભાઈ પરશુરામ સંવત્સરે

महिंद्रा सत्यम: बड़े सौदे हासिल होने से बढ़ेगी ताकत

 सत्यम कंप्यूटर्स (अब महिंद्रा सत्यम) के अधिग्रहण के तीन वर्ष बाद टेक महिंद्रा इस फर्म के कायाकल्प में सफल रही है। उसने ज्यादातर चुनौतियों को पार कर लिया है और वह प्रमुख व्यावसायिक विकास पर जोर दे रही है। महिंद्रा सत्यम के प्रदर्शन में पिछली 4-6 तिमाहियों से सुधार आया है जबकि टेक महिंद्रा भी मजबूत बनी हुई है। हालांकि महिंद्रा सत्यम बड़े सौदों (10 करोड़ डॉलर से अधिक के) में विफल रही है और सिर्फ 5 करोड़ डॉलर तक के सौदों के निष्पादन में सफल रही है। हालांकि विश्लेषक सौदों के मजबूत प्रवाह और विविध मार्जिन कारकों को देखते हुए दोनों ही कंपनियों पर सकारात्मक बने हुए हैं, लेकिन उनका मानना है कि महिंद्रा सत्यम का आगामी विकास बड़े सौदे हासिल करने की उसकी योग्यता पर निर्भर करता है।
दोनों ही फर्मों के प्रबंधन निर्णय लेने के चक्रों के संदर्भ में कुल मांग परिदृश्य को लेकर चौकस बने हुए हैं। महिंद्रा सत्यम के लिए, वृद्घि मौजूदा ग्राहकों की गति पर निर्भर करेगी जबकि टेक महिंद्रा के लिए गैर-बीटी व्यवसाय विकास का प्रमुख वाहक बना रहेगा। जून तिमाही के वित्तीय नतीजों के बाद ज्यादातर विश्लेषकों ने संयुक्त कंपनी टेक महिंद्रा-महिंद्रा सत्यम के लिए अपने वित्त वर्ष 2013 के आय अनुमानों में 8-10 फीसदी तक का इजाफा किया है। दोनों कंपनियों द्वारा मजबूत मार्जिन वृद्घि को देखते हुए विश्लेषकों ने इन आय अनुमानों में संशोधन किया है। जहां विलय से टेक महिंदा्र को लाभ मिला है वहीं प्रबंधन का मानना है कि कुछ प्रयासों का सकारात्मक परिणाम सामने आना अभी बाकी है।
ऐंजल ब्रोकिंग में आईटी विश्लेषक अंकिता सोमानी कहती हैं, '23.08 करोड़ की नई भागीदारी (टेक महिंद्रा और महिंद्रा सत्यम के विलय के बाद) को देखते हुए समेकित ईपीएस 84 रुपये पर है जिसके आधार पर टेक महिंद्रा की वैल्यू वित्त वर्ष 2013 की अनुमानित ईपीएस के 10 गुना पर है।' टेक महिंद्रा से जुड़े प्रमुख जोखिम हैं गैर-बीटी व्यवसाय में उम्मीद की तुलना में धीमी वृद्घि और 4500 करोड़ रुपये के अनुमान की तुलना में अधिक आकस्मिक देनदारियां। ज्यादातर विश्लेषक इन दोनों शेयरों पर सकारात्मक बने हुए हैं और उन्हें उम्मीद है कि चालू स्तरों से इनमें 15 फीसदी से अधिक की बढ़त देखने को मिलेगी।
महिंद्रा सत्यम
महिंद्रा सत्यम के अधिग्रहण के बाद टेक महिंद्रा ने ग्राहक/कर्मचारी बनाए रखने की दर और मार्जिन वृद्घि से जुड़ी ज्यादातर चुनौतियों को दूर कर लिया है। कंपनी ने पिछली 4-5 तिमाहियों में मजबूत राजस्व एवं आय वृद्घि भी दर्ज की है। प्रबंधन ने पिछले दो वर्षों के दौरान अपनी बिक्री और अकाउंट प्रबंधन कार्यों को भी सुव्यवस्थित बनाया है और इस पर लगातार ध्यान दिया है। हालांकि कंपनी 10 करोड़ डॉलर से बड़े आकार के सौदे हासिल करने में सफल नहीं रही है। हालांकि यूरोप और एशिया प्रशांत क्षेत्र में बड़े सौदे की प्रस्ताव प्रक्रिया में भागीदारी के लिए आमंत्रण की संख्या में इजाफा हुआ है, लेकिन अमेरिका में यह प्रक्रिया सुस्त बनी हुई है।
हालांकि एडीआर डी-लिस्टिंग के लिए अमेरिका में आंशिक रूप से सुस्त प्रतिक्रिया को माना जा रहा है, लेकिन विश्लेषकों का कहना है कि बड़े आकार के सौदे महिंद्रा सत्यम के आगामी विकास चरण के लिए अहम हैं। कुल मिला कर हालात में सुधार दिख रहा है।  आईआईएफएल के संदीप मुथंगी कहते हैं, 'महिंद्रा सत्यम के लिए बड़े सौदों की संभावना बढ़ी है, क्योंकि अमेरिका में भी पिछले कुछ महीनों में सौदों के प्रवाह में तेजी आई है।' प्रबंधन का भी कहना है कि कंपनी अमेरिका में बड़े सौदों (5 करोड़ डॉलर से अधिक) पर ध्यान दे रही है और उसे कुछ सौदे हासिल होने की उम्मीद है।
टेक महिंद्रा
टेक महिंद्रा के लिए प्रमुख समस्या प्रमुख ग्राहक ब्रिटिश टेलीकॉम (बीटी) से घटते राजस्व को लेकर है जो निचले स्तर पर दिख रहा है। बीटी व्यवसाय दो तिमाहियों से स्थिर बना हुआ है। बीटी प्रबंधन ने भी संकेत दिया है कि अपनी लागत को तर्कसंगत बनाए जाने की प्रक्रिया काफी हद तक पूरी हो गई है।
कंपनी ने पिछली कुछ तिमाहियों में अपने गैर-बीटी व्यवसाय का विस्तार किया है और भविष्य में भी इस राह पर तेजी से बढ़ रही है। कंपनी को जून तिमाही में अपने गैर-बीटी ग्राहकों से 5 करोड़ डॉलर का तीन वर्षीय अनुबंध मिला। आईसीआईसीआई सिक्योरिटीज के कुलदीप कौल का मानना है, 'टेक महिंद्रा के कुल राजस्व में मौजूदा समय में बीटी का योगदान 36 फीसदी है जो पिछली लगभग 10 तिमाहियों के उसके कुल राजस्व के लगभग 50 फीसदी से कम है। हालांकि इसकी वजह यह है कि बीटी राजस्व वित्त वर्ष 2012 में 6 फीसदी घटा है वहीं वित्त वर्ष 2012 में गैर-बीटी राजस्व 20 फीसदी तक
बढ़ा है।' 
कुल मिला कर टेक महिंद्रा का डॉलर राजस्व में वित्त वर्ष 2012-14 के दौरान 4 फीसदी की सीएजीआर दर्ज होने की संभावना है। टेक महिंद्रा के कर्ज में लगातार कमी भी भविष्य में उसे मुनाफा बढ़ाने में मददगार साबित होगी

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 कोल इंडिया: अच्छा प्रदर्शन, लेकिन अनिश्चितता बरकरार

 कोल इंडिया का शेयर जून तिमाही के लिए आशाजनक प्रदर्शन दर्ज करने के बाद 1.64 फीसदी की बढ़त के साथ बंद हुआ। कंपनी का राजस्व 14 फीसदी जबकि मुनाफा सालाना आधार पर 8 फीसदी बढ़ा है। इस शेयर के लिए विद्युत उत्पादकों के साथ ईंधन आपूर्ति समझौतों (एफएसए) में पेनाल्टी क्लॉज में बदलाव से जुड़ी खबरें बेहद अहम हैं। हालांकि प्रस्तावित बदलाव सकारात्मक हैं, पर बाजार अभी आयातित कोयले (कम आपूर्ति की स्थिति में अंतर को पाटने) के लिए कोल इंडिया और विद्युत उत्पादकों के बीच प्राइस पूलिंग को लेकर स्पष्टता का इंतजार कर रहा है। विश्लेषकों का मानना है कि आयातित कोयले की ऊंची लागत विद्युत उत्पादकों द्वारा वहन की जाएगी और इस संबंध में कोई भी विपरीत स्थिति कोल इंडिया के मार्जिन पर दबाव बढ़ा सकती है।
इसके अलावा वित्त वर्ष 2013 के अनुमानों को पूरा किए जाने के लिए सितंबर 2012 की तिमाही के दौरान उत्पादन और लदान (डिस्पैच) अहम होंगे। कुछ विश्लेषकों का कहना है कि चालू वर्ष के पहले चार महीनों में उत्पादन की रफ्तार को देखते हुए वित्त वर्ष 2013 के उत्पादन लक्ष्य के मुकाबले कुछ कमी देखी जा सकती है। फिलहाल विश्लेषकों का मानना है कि कोल इंडिया लक्ष्य को हासिल कर लेगी। इसे देखते हुए ज्यादातर विश्लेषक इस शेयर पर सकारात्मक हैं। ब्लूमबर्ग के अनुसार आम सहमति के आधार पर कीमत लक्ष्य 385 रुपये पर है जो 353 रुपये के मौजूदा स्तर से 9 फीसदी की संभावित तेजी का संकेत है।

लदान में तेजी
जून 2012 की तिमाही के दौरान रेलवे रेक (कोयला आपूर्ति के लिए डिब्बे) की बढ़ती उपलब्धता से कोल इंडिया की लदान में तेजी आई। रेलवे रेक की उपलब्धता जून तिमाही में बढ़ कर 177 रेक प्रतिदिन रही जो जून 2011 की तिमाही में 164 रेक प्रति दिन थी। वहीं रेलवे के जरिये उठाव में 11.2 फीसदी (सालाना आधार पर कुल उठाव 6.4 फीसदी की वृद्घि के साथ 11.304 करोड़ टन रहा) का इजाफा हुआ। जून 2012 की तिमाही के लिए उत्पादन 10.247 करोड़ टन (एमटी) रहा जो सालाना आधार पर 6.4 फीसदी अधिक है।

दूसरी तिमाही पर नजर
पिछली दो तिमाहियों में कोल इंडिया के संयुक्त उत्पादन (24.707 करोड़ टन) और लदान (23.587 करोड़ टन) से संकेत मिलता है कि कंपनी ऊंची दर पर डिस्पैच को बरकरार रखने के लिए इन्वेंट्री से लैस है। इस संदर्भ में कोल इंडिया जुलाई के दौरान 3.62 करोड़ टन की लदान में सफल रही, हालांकि उत्पादन 3.18 करोड़ टन रहा जो 3.23 करोड़ टन के उत्पादन लक्ष्य की तुलना में कम है। इससे कुछ हद तक चिंता पैदा हुई है। हालांकि दाइवा सिक्योरिटीज के विश्लेषकों का मानना है कि उत्पादन वृद्घि में कुल गिरावट कुछ सहायक इकाइयों में अस्थायी समस्याओं की वजह से आई है और आने वाले महीनों में यह वृद्घि सामान्य रहनी चाहिए। सितंबर तिमाही के लिए कंपनी ने 9.6 करोड़ टन के उत्पादन और 10.7 करोड़ टन की लदान का लक्ष्य रखा है।

संशोधित एफएसए
1.5 फीसदी की बेस पेनाल्टी और 40 फीसदी (50 फीसदी से कम आपूर्ति) की पीक पेनाल्टी के लिए विद्युत उत्पादकों के साथ एफएसए के लिए संशोधित पेनाल्टी क्लॉज का शेयर बाजार ने स्वागत किया है। मोतीलाल ओसवाल सिक्योरिटीज के विश्लेषकों का मानना है कि यह पूर्व के प्रस्तावों की तुलना में काफी बेहतर है। इसके अलावा प्रतिबद्घता और अपने स्वयं के उत्पादन के बीच किसी अंतर को पाटने के लिए कोयले के आयात का भी विकल्प है जिसे देखते हुए भी कोल इंडिया पर पेनाल्टी का अधिक प्रभाव पडऩे की आशंका नहीं दिख रही है।
हालांकि प्राइस पूलिंग पर स्थिति स्पष्ट होने का इंतजार किया जा रहा है। आमतौर पर यह माना जा रहा है कि विद्युत उत्पादक आयात की वृद्घिशील लागत को वहन करेंगे। हालांकि कोल इंडिया के मामले में वृद्घिशील लागत को साझा किए जाने से इसका मार्जिन प्रभावित हो सकता है।

पहली तिमाही
जून तिमाही में लागत नियंत्रण उपायों से कंपनी को परिचालन मुनाफा मार्जिन में मदद मिली, हालांकि 6130 करोड़ रुपये पर कर्मचारी लागत सालाना आधार पर 26 फीसदी अधिक रही। तिमाही आधार पर कर्मचारी लागत में 33 फीसदी की कमी आई। इसके अलावा संयुक्त रूप से संविदात्मक, विविध और ओवरबर्डन रिमूवल खर्च 1719 करोड़ रुपये (तिमाही आधार पर 40 फीसदी की कमी) तक घटा जिससे एबिटा मार्जिन 29.2 फीसदी बढ़ा जो मार्च की तिमाही में 19.5 फीसदी पर था।

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 डिवीज लैबोरेटरीज को जेनेरिक्स से मजबूती

 डिवीज लैबोरेटरीज के शेयरों ने मौजूदा वित्त वर्ष में 46 फीसदी से अधिक का रिटर्न दिया है। वैश्विक मंदी बरकरार है और ऐसे में शोध गतिविधियां घटने की आशंका जताई जा रही है, मगर इसके बावजूद कम लागत वाले उत्पादन मॉडल और ग्राहकों के साथ मजबूत संबंध की वजह से कंपनी का राजस्व और मुनाफा बढ़ा है। रुपये की कमजोरी से भी कंपनी के प्रदर्शन को बल मिला है क्योंकि उसे 90 फीसदी राजस्व निर्यात से हासिल होता है।
आने वाले समय में भी डिवीज के लिए बेहतर संभावनाएं नजर आ रही हैं। सभी सेगमेंट्स में बढिय़ा कारोबार हो रहा है। विशाखापत्तनम सेज से राजस्व और मुनाफे के और बढऩे की उम्मीद है। कंपनी पर फिलहाल ऊंचे कर का बोझ है, मगर सेज (यहां कर छूट का लाभ मिल रहा है) से बढ़े हुए उत्पादन के दम पर इसकी कुछ भरपाई हो रही है। ब्लूमबर्ग के आंकड़ों के मुताबिक ज्यादातर विश्लेषक (34 में से 32) ने शेयरों के लिए खरीद का सुझाव दिया है और 11 से 18 फीसदी की तेजी के साथ 1,250 से 1,325 रुपये का लक्ष्य तय किया है।

हर सेगमेंट में विकास, बढिय़ा मार्जिन
सभी सेगमेंट में विकास के दम पर डिवीज का राजस्व 29.7 फीसदी बढ़ा है। कॉन्ट्रैक्ट शोध और विनिर्माण (क्रैम्स) कारोबार से 22.25 फीसदी की दर से 214.8 करोड़ रुपये का राजस्व हासिल हुआ है। हालांकि जेनरिक्स का प्रदर्शन सबसे बेहतर रहा और बिक्री पिछले वर्ष की तुलना में 38 फीसदी बढ़कर 237.7 करोड़ रुपये रही। यहां तक की नए न्यूट्राक्यूटिकल सेगमेंट में भी 50 फीसदी की बढ़ोतरी देखी गई (इसका आधार छोटा है)। डिवीज ने मार्जिन के मोर्चे पर भी बाजार को आश्चर्यचकित किया है। जून तिमाही लगातार दूसरी ऐसी तिमाही है जब एबिटा मार्जिन 40 फीसदी के स्तर पर रहा है जबकि इससे पहले की तिमाहियों में यह 35 फीसदी से ऊपर था। जून तिमाही के लिए भी विश्लेषकों ने एबिटा मार्जिन 35 से 36 फीसदी रहने का अनुमान व्यक्त किया था। मजबूत मूल्य निर्धारण ताकत और अधिक मार्जिन वाले प्रोडक्ट मिक्स की वजह से कंपनी की मार्जिन वृद्घि में मदद मिली है। रुपये की कमजोरी से भी इस पर अनुकूल असर पड़ा है।

कर दरें घटने की उम्मीद
जून तिमाही के दौरान कर देनदारी में 72 फीसदी का इजाफा हुआ। वित्त वर्ष 2012 से ही कर दरें ऊंची रही हैं। विश्लेषकों के मुताबिक दिवि के लिए कर दरें वित्त वर्ष 2011 में 9.1 फीसदी थी जो वित्त वर्ष 2012 में बढ़कर 21.7 फीसदी हो गई। निर्यात आधारित इकाइयों के लिए कर छूट खत्म होने की वजह से कर दरों में इजाफा हुआ है। जून 2012 तिमाही में कर की दरें 25.5 फीसदी थीं। हालांकि विशाखापत्तनम सेज में उत्पादन बढऩे से अगले दो साल के दौरान कर दरों में बदलाव आने की उम्मीद है। 

आगे की संभावनाएं
वित्त वर्ष 2012 के आखिर में दिवि का उपभोक्ता आधार बढ़कर 300 से भी ऊपर चला गया है। इसमें कंपनी के सभी कारोबार शामिल हैं। यह एक सकारात्मक पहलू है क्योंकि बढ़े हुए उपभोक्ता आधार से ऑर्डरों में तेजी कंपनी को अपना राजस्व विकास बनाने में मदद करेगी और साथ ही बिक्री को जोखिम भी कम हो जाएगा। असके अलावा विशाखापत्तनम सेज की दूसरी इकाई को जून से जुलाई 2012 के बीच 3 सीजीएमपी जांच के दायरे से गुजरना पड़ा है। इसमें टीजीए ऑस्ट्रेलिया और अमेरिकी एफडीए शामिल है। विश्लेषकों का कहना है कि अब तक किसी तरह की कोई आपत्ति नहीं जताई गई है और ऐसे में निष्कर्ष भी सकारात्मक रहने की उम्मीद है। कार्वी के विश्लेषकों का मानना है कि सेज को सफलतापूर्वक पूरा करने से कंपनी के पास नियमित बाजार के लिए उत्पादन और राजस्व बनाए रखने का मौका होगा।
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 કોપ્ય રીઘ્ત વિકાસ પ સંવત્સરે

                                       VIKAS PARSHURAM SAMWATSARE

TIPS NIFTY FUTURE CALLS DATED 13/8/12 TO.....

 PANIC BUY CENTEX SL 308 T 340 354 

@ BUY HEXAWARE SL 114 T 124 128 

@ BUY MNM SL 710 TGT 750 770 

@ BUY COLGATE SL 1140 TGT 1240 1265 

 @ INFOSYS ABV 2330 T 2340 2350 BLW 2310 T 2300 2290

 @ RELIANCE ABV 792 T 797 803 BLW 782 T 777 772

 @ HEROHONDA ABV 1925 T 1935 1945 BLW 1905 T 1895 1885

 @ SBI ABV 1910 T 1920 1930 BLW 1890 T 1880 1870

 @ BPCL ABV 355 T 358 361 BLW 349 T 346 343 

@ VOLTAS ABV 107 T 109 111 BLW 105 T 103 101 

@ ASIANPAINT ABV 3750 T 3765 3780 BLW 3730 T 3715 3700 

@ ABB ABV 780 T 785 790 BLW 770 T 765 760

@ CAIRN ABV 327 T 330 333 BLW 324 T 321 318

 @ RELINFRA ABV 508 T 512 516 BLW 502 T 498 494 

 @ J&KBANK ABV 930 T 935 940 BLW 920 T 915 910

 @ SESAGOA ABV 192 T 194 196 BLW 190 T 188 186 

@ SRF ABV 213 T 215 217 BLW 211 T 209 207

 @ ZEE TV ABV 169 T 171 173 BLW 167 T 165 163 

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MCX MARKET 

GOLD ABV 30120 T 30180 30240 BLW 30020 T 29960 29900

 @ SILVER ABV 53625 T 53750 53925 BLW 53425 T 53300 52175

 @ COPPER ABV 417 T 418.50 420 BLW 414 T 412.50 411 

@ CRUDE ABV 5200 T 5215 5230 BLW 5160 T 5145 5130

 @ NICKLE ABV 860 T 865 870 BLW 850 T 845 840 

@ NATGAS ABV 159 T 160.50 162 BLW 151 T 149.50 148 

@ LEAD ABV 105.40 T 105.80 106.20 BLW 105.40 T 105 104.60 

@ ZINC ABV 102.30 T 102.70 103 BLW 101.90 T 101.50 101.10 

@ ALUMINUM ABV 103.80 T 104.20 104.60 BLW 103 T 102.60 102 

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NCDX

 

 PEPPER ABV 44050 T 44150 44250 BLW 43850 T 43750 43650

 @ JERRA ABV 16050 T 16150 16250 BLW 15800 T 15700 15600 TURMERIC ABV 5740 T 5770 5800 BLW 5620 T 5590 5560

 @ CARDAMOM ABV 1190 T 1200 1210 BLW 1160 T 1150 1140

 @ CHANA ABV 4900 T 4925 4950 BLW 4875 T 4850 4825 

@ MENTHA ABV 1340 T 1350 1360 BLW 1300 T 1290 1280

 @ SOYABEEN ABV 4030 T 4050 4070 BLW 3970 T 3950 3930 

@ RMSEED ABV 4400 T 4420 4460 BLW 4370 T 4350 4330

@ DHANIYA ABV 4680 T 4700 4720 BLW 4590 T 4570 4550 

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BIG BOSS VIKAS PARSHURAM SAMWATSARE 

COPYRIGHT  2012

VPSAMWATSARE@REDIFFMAIL.COM

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VIKAS PARSHURAM SAMWATSARE

1. Reduce Crompton Greaves (CRG) For Target .94 

Crompton Greaves (CRG) has acquired ZIV group at an Enterprise Value of EUR150 mn (~Rs 10 bn). ZIV is engaged in design. Engineering, manufacturing and support of Intelligent Electrical Device (IEDs) and automation systems for Utilities and Industries.

*  We interacted with various industry players to understand that market dynamics of smart grid. US market has been the largest market for Smart
grid followed by Europe. Indian market is currently in a nascent stage sized at Rs 8-9 bn per annum.

*  With the acquisition Crompton marks its tenth overseas acquisition in the span of last six years. Management expects that the acquisition
would add substantially to company's offering in providing comprehensive energy saving solutions with latest technology.

*  We believe that the ZIV acquisition is likely to be value accretive in FY13 and offer long term strategic advantage to Crompton. Acquisition value
at EUR 150 mn looks reasonable.

* We highlight that currently overseas subsidies has been experiencing headwinds of economic slowdown in certain geographies mainly in Europe;
integration of existing subsidiaries and realignment of their core business processes along with that of ZIV now continues to remain a challenge.

* We therefore tweak our estimates and do not make substantial revisions in FY13 earnings. Maintain 'Reduce' rating on the company's stock with
a one year DCF based revised target price of Rs 94 (Rs 90 earlier).

Valuation & Recommendation

* At the current price of Rs 119, company's stock is trading at 14.5x P/E and 7.3 x EV/EBITDA on FY13E earnings.

*  We maintain our 'Reduce' rating on the company's stock with a one year DCF based revised target price of Rs 94 (Rs 90 earlier).

2.  Two-wheeler, CV Sales Dismal; Car Sales Mixed

Two-wheeler, CV Sales Dismal; Car Sales Mixed

Two-wheeler sales in July 2012 were disappointing, with major two-wheeler companies reporting a fall in sales. Car sales were mixed, with a few companies posting better-than-expected numbers and others coming out with dismal numbers. In two-wheelers, key players like Hero MotoCorp, Bajaj Auto and TVS Motor Company reported decline in sales. Hero MotoCorp’s sales declined 1.4 %  YoY, while TVS Motor and Bajaj Auto registered 15.1% and 5.4% YoY drop in sales, respectively. In the car segment, Maruti Suzuki India (MSIL) registered a 9.2% YoY growth in sales, despite the ongoing lockout, largely due to a low base and available inventory of ~10 days. Tata Motors and Mahindra & Mahindra (M&M) reported better-than-expected sales numbers, with both the companies posting overall growth of over 15% YoY, driven by higher sales of cars and utility vehicles (UVs). Sales of Ford India, Honda Siel Motors, and GM India continued their sluggish trend, reporting a decline of 16.9% 7.2% and 23.4%, respectively, YoY. In the medium and heavy commercial vehicle (MHCV) segment, sales momentum weakened further with Tata Motors, Ashok Leyland and Eicher Motors witnessing double-digit fall in sales by 21.2%, 10.9% and 13.2%, respectively, YoY. Given the weak macro-economic environment, automobile sales are likely to stay under pressure in the near term.

Key highlights:

*  MSIL reported a 9.2% YoY growth in sales on account of low base due to a strike at its Manesar plant in June 2011. On MoM basis, sales declined 14.9% due to the  current lockout at this plant. Meanwhile, the impact of the ongoing lockout was partly visible in July 2012 sales as the company had an inventory of ~10 days.

*  Hyundai Motors India reported a modest 6.4% YoY growth in sales, driven by 7.6% YoY rise in domestic market. Exports were up by 5.1% YoY.

*  Tata Motors posted a 15.3% YoY growth in sales led by higher sales of passenger cars, LCVs and UVs which grew 48.0%, 15.0% and 59.4%, respectively, YoY.

* Sales of Ford India, Honda Siel, and GM India continued their sluggish trend, with these companies witnessing a YoY fall in sales by 16.9%, 7.2% and 23.4%, respectively.

*  Toyota-Kirloskar Motors posted single-digit rise in sales (7.2% YoY) with the highbase effect catching up. Nissan India’s sales grew 118.5% YoY following a low base.

* M&M’s automotive segment sales were up18.7% YoY, driven by growth in sales of UVs and higher exports, while tractor sales, after reporting a positive growth in June 2012, entered the negative zone with a drop of 1.0% YoY.

* In two-wheelers, market leader Hero MotoCorp’s sales fell below 500,000 units after a period of 11 months, down 1.4% YoY.

* TVS Motor posted a steep decline in sales by 15.1% YoY. Both domestic and export sales were down 12.2% and 32.8%, respectively, YoY.

* Bajaj Auto reported a 5.4% YoY decline in sales because of lower exports, which were down 12.8% YoY. Three-wheeler sales were down 22.6% YoY, but up 31.8% MoM.

* Honda Motors & Scooters India (HMSI) reported a 56.9% YoY growth in sales driven by higher motorcycle sales, up 80.3% at 152,382 units.

*  Ashok Leyland’s and Eicher Motors’ MHCV sales were down 10.9% and 13.2%,  respectively, YoY.

3. Buy Redington India Ltd For Target 88 

Results were below expectations. Q1 quarter is a slow quarter for the company, however YoY revenues disappointed.

Revenues grew 3.3% YoY to Rs.5371.5 crore on the back of India business growing 3% YoY and the overseas revenues growing 3.5% YoY.

EBIDTA margins remained flat YoY at 2.66%.

PAT de grew by 6.6% YoY on the back of higher tax rate during the quarter.

India Operations – High Valued Products aided the growth

India business grew 4.4% QoQ and 3% YoY mainly on the back of high valued products. However, the government spending was subdued due to lack of decision making. Similarly, even the corporate sector spending was restrained due to dismal outlook of the economy. Blackberry sales have remained stable during the quarter.

The company in the Q4FY12 quarter had indicated a growth of 14%-15% for FY13E on the back of lower government and corporate demand.

Overseas Operations – Hit by gloomy Global Outlook

Overseas revenues were affected by the overall slag in the global economy.  Arena continues to remain under structural re-structuring phase and
cancellation of contract with Nokia also contributed to slowness. However, Samsung is expected to make up for the Nokia loss of contract in the Q3 and the Q4 quarter of FY13E.

Guidance

Company has given a guidance of 14-15% growth both for India as well as the Overseas business.

Valuation & Recommendation

The company is facing pressure from the overall weakness in the economy coupled by pressure at its Turkey subsidiary and dis-continuation of contract with Nokia. Slowing down of revenues from the past two quarters remains a concern and reflects in the stock price which has corrected almost 20% in the past 3 months. We believe this is a temporary phenomenon and would lay its impact in FY13. However, with Samsung revenues catching up in the coming quarters and resolution of hitch at the Arena subsidiary, we believe the company would again go back to its regular growth trajectory.

We reduce our target price from the earlier Rs.96 to Rs.88 assigning a lower P/E multiple of 10x (earlier 11x) for FY13E expected earnings due to lower revenue visibility in the near future. At CMP, the stock is trading at 8.6x and 7.3x its FY13E and FY14E expected earnings and looks attractive for long term investment and recommend BUY.

4.  Accumulate India Overseas Bank (IOB) For Target .84

Q1FY13: Disappointment continues; near term outlook remains challenging with ~12% of stressed assets along with thin margin as well as need for recapitalization (tier-I capital at 7.92%). 

* NII came at Rs.13.28 bn, a modest growth of 11.8% YoY, due to 26bps (YoY) decline in NIM (2.59% in Q1FY13) despite strong growth in loan
book (24.5% YoY). Net profit grew 13.5% YoY (Rs.2.33 bn), slightly lower than our estimates, on back of higher credit costs (NPA provisions shot
up QoQ from Rs.2.77 bn during Q4FY12 to Rs.4.07 bn during Q1FY12).

*  Business growth has continued to moderate since Q4FY12; loan book grew 24.5% YoY partly aided by overseas book (49.2% YoY; share at
12.5% of total loan book). Deposits grew 22.3% YoY but at the cost of shrinking CASA mix (declined 250bps to 25.1%).

*  NIM has been on the declining path (2.59% in Q1FY13; lowest in last six years) due to deterioration in the liability franchise along with shift towards lower yielding asset mix (corporate loan growth is faster than other segments). IOB needs recapitalization as its tier-I capital stands at
7.92%. This does not bode well in the prevailing macro environment.

* Improving the asset quality remains the biggest challenge for IOB, in our view. Their ~12% of loan book is facing stress (restructured book + gross
NPA), one of the highest in the industry. Gross slippage has remained at the elevated levels (Rs.8.65 bn, 2.4% on annualized basis), while up gradation and cash recovery was relatively subdued vis-à-vis previous quarter.

*  We believe, the near term outlook remains challenging for the stock with ~12% of stressed assets along with thin NIM as well as need for recapitalization (tier-I capital at 7.92%). IOB is likely to report subdued return ratios (RoE: 10-11%, RoA: 0.5%) during FY13E/14E and hence, we retain ACCUMULATE rating on the stock with lower TP of Rs.84 (Rs.96 earlier) based on 0.75x its FY13E ABV. We advise our clients to remain cautious on the stock and look for better entry opportunity in the future.

Valuation and recommendation

Although IOB is currently trading close to its lower end of its historical valuation band (0.7x FY13E ABV; 5.6x FY13E earnings), we believe, the near term outlook remains challenging for the stock on back of high share (~12% of loan book) of stressed assets (restructured book + gross NPA) along with thin NIM as well as need for recapitalization (tier-I capital at 7.92%).

5.  Hold Cipla For Target Rs.379

Many Positive Surprises; 2QFY13 To Be Stronger As Well

Cipla’s 1QFY13 performance was significantly better than our/consensus expectations as a better product mix (lower anti-retroviral or ARV sales, higher domestic sales), Escitalopram (CNS drug) supply to Teva (~56% market share) and currency benefits (only US$220mn of hedges) led to much-higher-than expected improvement in margins. We believe most of these positives will play out in 2QFY13 as well – as 1QFY13 is the third consecutive quarter of over 15% growth in domestic business - showing the benefits of recent additions to sales force/therapies have started flowing in, while Escitalopram supply (for one more quarter) and rupee depreciation continue to aid exports. We have increased our FY13E/FY14E EPS estimates by 20%/5%, respectively, factoring in much higher improvement in margins (300bps higher than our earlier estimates) and revised our target price to Rs379 (from Rs347 earlier), valuing the stock at 19xFY14E revised EPS of Rs20. We retain our Hold rating on the stock.

Strong domestic growth; export growth restricted by lower ARV sales:

Domestic revenue surprised positively with 30% YoY,29% QoQ growth - highest in more than 20 quarters and the third consecutive quarter of above industry growth (14-15%) - benefitting from recent sales force/therapy additions and partly from a low base. Export formulations growth, however, was restricted to 23% YoY, as the upside from Escitalopram supply to Teva (market share of ~56%) and a favourable rupee were negated by lower ARV sales (contributing less than 15% to exports). API exports were flat YoY, while Indore SEZ’s contribution was similar to 4QFY12 level  (~Rs1.9bn). Cipla’s management has revised FY13 revenue guidance from 10% earlier to 12-15%. 

Margins beat estimates, PAT follows suit:

EBITDA margin of 27.6% was 432bps/406bps higher than our/consensus estimates, respectively, leading to our earnings estimates getting missed. Most of the improvement was witnessed in gross margin (up 460bps YoY, 400bps QoQ), benefiting from a better product mix (lower
ARV sales, higher local sales) and favourable rupee. Strong operating performance and forex gains of Rs230mn drove PAT (up 58% YoY, 37% QoQ) above estimates.

We upgrade FY13E/FY14E EPS estimates by 20%/5%, respectively:

Taking into account strong 1QFY12 performance, we increase our FY13E margin assumption by 300bps (from our earlier estimate) and factor in higher domestic revenue growth, thereby leading to upward revision of 20%/5% in our FY13E/FY14E EPS, respectively. We have also upgraded our target multiple from 18x to 19x (to factor in improved outlook) and revised our target price to Rs379 (from Rs347 earlier), valuing the stock at
19xFY14E EPS of Rs20. We retain our Hold rating on the stock.

6. Buy Phoenix Mills Ltd For Target .237

Revenues of the company were better than our estimates led by improvement in rentals and also on account of reclassification of electricity expenses recovered from licensees. Operating margins remained strong. Net profit growth was slightly better than our estimates. Pune, Kurla and Bangalore market cities are slowly witnessing increased trading densities while Chennai market city is expected to commence operations by
Q2FY13. We maintain BUY on the stock.

Valuation and recommendation

* At current price of Rs 183, stock is trading at 20.2x P/E and 12.1x EV/EBITDA.

*  We value the company on sum of the parts valuation and arrive at a target price of Rs 237 on FY13 estimates.

* We remain positive on the company due to its robust business model, excellent operating cash flows from HSP and expertise to capitalize on the upcoming opportunities in the retail sector in various cities.

*  We thus recommend BUY on the stock.

*  Key risks for the stock would be further delays in launch of Shangri-La and lower than expected ramp up in occupancies in key market cities.

7. Buy Petronet LNG For Target 186 

Cost Saving, Higher Marketing Margin Boost Earnings

Petronet LNG reported a net profit of Rs2,708mn for 1QFY13 (up 10.5 % QoQ, 5.5% YoY) higher by 13%/18% compared to Bloomberg/our estimates, respectively. Its higher earnings were aided by cost saving of Rs200mn on time charter rates and higher marketing margin in a buoyant spot market, despite volume declining on plant shutdown by fertiliser companies. Adjusted for one-time cost saving, net profit was up 5% QoQ We believe Petronet LNG would remain an important clog wheel to play imported gas theme in times of a gas-deficit market in India. We retain our Buy rating on the stock with a revised target price of Rs186 based on DCF methodology.

Higher netback margin supplant volume drop:

The company’s netback margin in 1QFY13 inched up to Rs42.01/mmBtu from Rs36.75/mmBtu in 4QFY12. It earned higher netback margin on: (1) Cost saving to the tune of Rs200mn on time charter rates, as one of the three ships hired was on dry docking, and (2) Higher marketing margin. Both factors led realisation to improve 6.27% QoQ, while gas cost was up 6.23%. Blended gas cost in 1QFY13 touched US$10.22/mmBtu compared to US$9.62/mmBtu. The company’s gas price (FoB) for Rasgas touched US$9.0/mmBtu.

Soaring marketing margin boosts earnings:

Our analysis indicates the company enjoyed a marketing margin of Rs37.78/mmBtu(US$0.69/mmBtu) in 1QFY13 compared to Rs7.44/mmBtu(US$0.15/mmBtu) in the previous quarter. It sold ~21tBtu of spot gas compared to ~26.5tBtu in 4QFY12. Spot gas sold during the quarter was mainly shortterm in nature having an assured supply of one-two years and the company will maintain the current run rate in short-term spot gas for next three quarters. We have assumed Rs40/Rs30/mmBtu marketing margin for FY13E/14E, respectively.

Volume lacklustre on plant shutdown by users:

Gas delivered in 1QFY13 declined 6% QoQ & 4% YoY to 127tBtu. Out of 127tBtu, 96tBtu was delivered on long-term basis, 21tBtu on spot basis and the balance 11tBtu under regasification service. The management attributed the fall in volume to shutdown of five fertiliser plants in April 2012, but volume from these units recovered from May 2012. We have assumed volume of 576tBtu/645tBtu (11.3mmtpa/12.66mmtpa) for FY13/FY14E, respectively, of which assumed volume for Kochi terminal stands at 25.5tBtu/76.48tBtu for FY13E/FY14E.

Outlook & valuation:

Petronet LNG stock presently languishes on account of: (1) Likely lower utilisation of newly built Kochi terminal in FY13-14 depressing earnings due to higher interest costs and depreciation, (2) Inability to sign long-term contracts for gas offtake, (3) Major boost to incremental volume starting only from 2HFY14, and (4) Lack of a clear regulatory environment for new RLNG terminals. With the stock trading at 10x FY13E EPS, we see it as an attractive opportunity to participate in a structural five-year growth story with a volume/EPS CAGR of 13%/18%, with least regulatory risk. We retain our Buy rating on the stock with a target price of Rs186.

8. 

 Accumulate Jaiprakash Associates Ltd Ltd For Target .83

Revenues of the company in Q1FY13 came lower than our estimates due to lower than expected revenues from the cement and real estate division. Company has demerged the south and west cement plants and transferred it to Jaypee Cement Corporation Ltd so correspondingly it has
restated financials of Q1FY12.

*  Operating margins in Q1FY13 stood strong at 26% and primarily led by strong margins in construction and real estate division.

*  Net profit for the quarter was slightly ahead of our estimates led by strong operating margins and lower than expected interest outgo.

*  At current price of Rs 76, stock is trading at 23.4x P/E and 11.6x EV/   EBITDA on FY13 estimates respectively. We maintain our FY13 estimates and price target of Rs 83. We had upgraded the stock to BUY in our last recommendation at Rs 61. Owing to limited upside from the current levels, we now downgrade the stock to ACCUMULATE and would look for dips in the stock to buy with a long term view.

Valuation and recommendation

*  At current price of Rs 76, stock is trading at 23.4x P/E and 11.6x EV/EBITDA on FY12 and FY13 estimates respectively.

*  We maintain our FY13 estimates and price target of Rs 83. We had upgraded the stock to BUY in our last recommendation at Rs 61. Owing to limited upside from the current levels, we now downgrade the stock to ACCUMULATE and would look for dips in the stock to buy with a long term view.

VIKAS PARSHURAM SAMWATSAE

Hold Ambuja Cement. For Target Rs.203

Robust Operating Performance

Ambuja Cement’s (ACL) 2QCY12 EBITDA/tn of Rs1,284 and EBITDA margin of 28.2% was better than our estimates, primarily driven by  igher realisation. EBITDA rose 24% and net profit rose 35%, which was 4%/3% and 5%/4% higher than our/Bloomberg estimates,  espectively. Despite the likely decline in cement prices and subdued demand in the monsoon season, we expect reduced prospects of  arnings downgrade in 2HCY12 following easing cost pressure and a sequential increase in realisation by 7%. Therefore, we retain our  arnings estimates for CY12 and CY13 and target price of Rs203, but downgrade the rating on the stock from Buy to Hold following the recent  run-up in its price.

Realisation beat estimates:

ACL’s net sales rose 18.1% YoY to Rs25.7bn, broadly in line with our and Bloomberg estimates. Cement realisation increased 11% YoY (7% QoQ) to Rs4,562/tn against our estimate of Rs4,474/tn. Cement sales volume (including clinker) grew 6.3% to 5.63mt (lower than our  stimate of 5.80mt). For 2QCY12, cement realisation was 4% higher than our than our estimate of Rs4,368/tn for CY12E. Thus, despite the  xpected price cut during the monsoon season, we don’t see the prospects of lower realisation compared to our estimate for CY12. 

EBITDA/tn at Rs1,284 near historical high:

EBITDA increased 24% YoY to Rs. 7.22bn (up 4%/3% than our/Bloomberg estimates, respectively). The company posted EBITDA/tn of  s1,284, which is near its historical high, and EBITDA margin improved 130bps to 28.2%, primarily driven by higher realisation. Freight costs  including internal raw material transfer) increased 10.9% to Rs 1,009/tn, primarily due to full impact of the increase in rail freight and higher  iesel prices. Power and fuel costs remained flat YoY. Overall total expenses rose 9% to Rs3,278/tn (up Rs271/tn versus rise in realisation by  s453/tn) which led to robust operating performance.

Net profit higher than estimates:

Net profit increased 34.9% to Rs. 4.68bn, (up 5% and 4%, respectively, compared to our/Bloomberg estimates), driven by robust operational  erformance and higher other income. The company reported EPS of Rs 6.4, which is 62% of the CY12 estimate. Therefore, we believe there  s lower probability of earnings downgrade in 2HCY12.

Valuation:

At the CMP of Rs 180, ACL trades at a PE multiple of 13x, EV/EBITDA multiple of 7.3x and EV/tn of US$169 on CY13E earnings. We have  etained our target price of Rs203 based on 8.5x EV/EBITDA, which is ~ACL's past 10 years’ average one-year forward EV/EBITDA multiple  which captures the upcycle/downcycle). However, we have downgraded our rating on the stock from Buy to Hold following the recent run-up  in the stock price.

2.  Buy Sterlite Industries India For Target Rs.138

Performance In Line; Maintain Buy

Sterlite Industries India’s (SIIL) 1QFY13 EBITDA was 5%/7% below our/street estimates, while PAT was 1%/5% above our/street estimates,  espectively, due to higher other income and lower tax despite being hit by forex loss. Power segment posted a strong performance, while  ther segments like aluminium, zinc and copper witnessed minor pressure. SIIL will witness multiple expansion projects getting  ommissioned in the next one year, which would ensure healthy growth. We retain our Buy rating, earning estimates as well as the TP on SIIL  of Rs138. Our  TP is based on the combined entity, Sesa-Sterlite’s valuation.

Power segment gives a positive surprise, aluminium and copper drags:

Driven by lower costs due to higher power generation and better coal availability, the power segment was able to post EBITDA margin of  7.6% versus 32.4% in 4QFY12 and 27.0% in 1QFY12. Power realisation per unit increased 1% QoQ, while costs/unit dropped 6% QoQ.  luminium segment, particularly BALCO, continued to witness high costs to the tune of 17% YoY and 7% QoQ in rupee terms due to tapering  f coal linkage and higher costs of alumina due to low grade of bauxite. Copper segment also disappointed due to lower Tc/Rc margin and  igher production costs.

Expansion update:

BALCO is likely to start metal tapping operations at its 325,000tn smelter from 3QFY13 onwards, while the first 300MW unit of its 1,200MW  ower plant is set for synchronisation in 2QFY13 (deferred by a quarter). SEL’s fourth unit is under trial run and the same is likely to start  ommercial power generation in 2QFY13. After getting environmental clearance, SIIL is looking at obtaining stage-II forest clearance for  11mt BALCO coal block, but we expect a major delay. Talwandi Sabo plant is progressing well and its first unit of 660MW is set to be synchronised   t the end of 4QFY13, although we expect a delay of 3-6 months. SIIL has indicated that the new expansion plan for HZL is being prepared and would be presented in due course.

Other highlights:

SIIL started an additional 700MW power transmission capacity in 1QFY13, while, it expects to commission another 1,000MW transmission  apacity by 4QFY13, taking the total capacity to 2,850MW. SIIL has responded to Coal India’s offer of supplying pit-stock inventory (logistics  rrangements have to be made by the buyer) at the administered price. It expects 2-3mt of additional coal from this route.

  

3.Buy Mrf Limited. For Target Rs.11582

* MRF Ltd is India’s largest tyre manufacturer and it is the first tyre company in India to reach a turnover of 5000 Crores.

* The Company engages  n the manufacture, distribution, and sale of tyres for various kinds of vehicles in India and internationally. MRF exports  its products to over 65 countries.

* The company also provides tubes, flaps, tread rubber, conveyor belts, specialty coatings, and sports goods.

* During the quarter, the robust  rowth of Net Profit is increased by 352.46% to Rs. 1445.60 million.

* MRF Ltd has approved the payment of interim dividend of Rs. 3/- per each equity share.

* Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 21% over 2010 to 2013E respectively.

* The prototypes for  erification and validation testing are manufactured in one of MRF's 6 factories all of this are TS 16949/ISO 9001 certified, and the national standards like BIS/JIS/ETRTO/T&RA.

Investment Highlights

Results updates- Q3 FY12

MRF Ltd a leader in the category holds the No.1 position is the top producers of tyres & Tubes in the world and in India, reported its financial  esults for the quarter ended 30th Jun, 2012. The third quarter witnesses a healthy increase in overall sales as well as profitability on ccount, nenhanced Dealers network and robust infrastructural Support system.

The company’s net profit spring to Rs.1445.60 million against Rs.319.50 million in the corresponding quarter ending of previous year, an  ncrease of 352.46%. Revenue for the quarter rose 16.91% to Rs.30082.70 million from Rs.25730.60 million, when compared with the prior  ear period. Reported earnings per share of the company stand at Rs.340.94 a share during the quarter, registering 352.46% increase over  revious year period. Profit before interest, depreciation and tax is Rs.3267.30 millions as against Rs.1647.60 millions in the corresponding  eriod of the previous year.

4.  Hold Gujarat Gas Company. For Target Rs.329

Quiet Quarter, But Early Sign Of Convalescence

Gujarat Gas Company (GGCL) reported net profit 10.5%/10.8% lower than Bloomberg consensus/our estimates, although sales were up 5.0%/4.7% higher than consensus/our estimates, respectively. The key reason for lower earnings are: (1) 5% QoQ fall in volume growth (2) 71% fall in other income on YoY basis, which led PAT/scm to drop to Rs1.83/scm from Rs2.14/scm in the previous quarter. We upgrade the stock to Hold from Sell with a revised target price of Rs329 from Rs315  earlier, following early signs of positive developments on company-specific issues and macro issues related to the city gas distribution (CGD) space in Gujarat.

Margins scenario improving:

EBITDA increased to Rs2.67/scm in 2QCY12 versus Rs2.20/scm in 1QCY12. EBITDA/scm has been perking up since the last three uarters
with the company being able to pass on higher gas costs to consumers, but is still lower than Rs2.91/scm in CY11 and Rs3.14/scm in CY10. With a rising proportion of RLNG in the gas basket, blended gas cost inched up to Rs21.94/scm (US$14.46/mmBtu) compared to Rs19.59/scm(US$13.46/mmBtu) in the previous quarter. Blended gas sale prices increased by 13% QoQ to Rs26.50/scm from Rs23.50/scm, though gas costs rose 12% QoQ. In the past two quarters, the company has seen a higher increase in blended realisation  ompared to increase in blended gas costs, which led to improvement in EBITDA/scm. We believe it is likely to maintain EBITDA/scm of  s2.74/Rs2.91 in CY12E/CY13E, respectively.

Volume stuck in a tight range:

Gas sold during 2QCY12 in volume terms dropped 5.0%QoQ/4.3% YoY to 3.18mmscmd (289 mmscm). The volume growth in 2QCY12 was the lowest in the past 10 quarters, despite the fact that more than 5,800 vehicles were converted to natural gas during the quarter and  10,700 households connected to gas supply, taking the total number of households to more than 352,000. We expect the volume to remain  t 3.3mmscm/3.45mmscm in CY12E/CY13E, respectively. The key upside risk to our volume growth - impact of recent Gujarat High Court’s  erdict on mandatory conversion to natural gas for all cars with an assured allocation from lowpriced APM (administered price mechanism)  as.

Outlook and valuation:

We upgrade the stock to Hold from Sell to reflect: (1) Slim chances of aggressive bidding war on pressure emerging from Gujarat overnment, (2) Gujarat High Court’s verdict to compulsorily convert all cars to natural gas could bring in the much desired volume growth  ven with existing geographies, (3) Improving margin profile with EBITDA/scm since the past three quarters. We have valued GGCL on DCF basis (WACC 13.75%, terminal growth 1%) with a revised TP of Rs329 from our earlier TP of Rs315.

5. Buy Tata Motors. For Target Rs.245 

 

TATAMOTORS (TTMT IS EQUITY) – WEEKLY
Given below is the weekly chart of TATAMOTORS. The stock has taken support at the Long term Trendline joining the lows of July 2009 and September 2011. In addition, the stock held the 61.85 retracement level (207.5) of the rise from September 2011 to April 2012. In the previous uptrend the weekly RSI broke above the 60 levels establishing a Bullish Range therefore the current RSI level of 40 should also act as a  upport. We initiate a Buy call on TATAMOTORS with a Target of Rs 245. Traders can keep a stop loss at Rs 200 on a closing basis.

6.  Hold Bharat Heavy Electricals. For Target Rs.221

Performance Likely To Moderate

Bharat Heavy Electricals (BHEL) reported revenue of Rs83.3bn for 1QFY13, up 16.9% YoY and 9.5%/6.4% higher than our/Bloomberg consensus estimates, respectively. However, we believe the pace of order execution may not sustain in the coming quarters with a declining order book, subdued order placement  activity and possible delay from the clients’ side owing to structural issues in the power sector. Consequently, we maintain our revenue estimates for FY13E/FY14E. Driven by higher revenue, EBITDA/PAT were higher than our estimates by 7.9%/8.6%, respectively, but margins were largely in line with our estimates. EBITDA grew 17.8% YoY to Rs10.9bn, translating to an operating margin of 13.1%, 20bps lower than our estimate of 13.3%. PAT registered 12.9% YoY growth at Rs9.2bn, resulting in a net profit margin of 11.1%, in line with our estimate. Consequently, we maintain our view of sharp erosion in profitability for BHEL over FY12-14E. We retain our Hold rating on the stock with a target price of Rs221 based on 9xFY14E EPS.

Order intake to remain weak:

Procedural delays on account of land acquisition, fuel linkage and environment/forest clearance continued to hamper order placement activity in the power sector. For the quarter, BHEL reported order inflow of only Rs56bn (weak order intake in four out of the past five quarters) leading to order backlog of Rs1,329bn,  13.3% lower YoY. BHEL is yet to be awarded orders worth Rs93.8bn by NTPC through its bulk tenders. Although the management reiterated its order inflow guidance of Rs600bn for FY13E, we are factoring in order inflow assumption of Rs450bn as we expect the policy paralysis in the power sector to continue.

Margin compression likely:

We expect a sharp erosion in profitability for BHEL over FY12-14E due to pricing pressure in the BTG (boiler, turbine and generator) space
owing to dual impact of oversupply and weak demand. The industry segment is also beginning to witness softening margins as it registered a 160bps YoY decline in operating margin to 21% for the quarter. Consequently, we expect BHEL’s operating margin to fall 160bps/150bps YoY in FY13E/FY14E to 17.7%/16.2%, respectively.

Outlook and Valuation:

BHEL is unlikely to sustain its revenue growth traction on such a high base, considering the subdued order placement activity. Also, ompression in operating margin is likely to lead to earnings CAGR decline of 7.9% over FY12-14E. However, we believe the recent correction in its stock price factors in these negatives. At Rs212, BHEL trades at 8.0x/8.6x FY13E/FY14E earnings, respectively, compared to average PE of 16x over the past 10 years and least PE of 7.9x/6.5x over the past 6/10 years, respectively. We value the stock at 9xFY14E EPS of s24.6 with a target price of Rs221 and retain our Hold rating on it.

7.  Buy Acc. For Target Rs.1,469

ACC’s 2QCY12 results are above our expectations, with EBITDA at Rs6.5bn (up 6.2% than our/Bloomberg estimates), EBITDA margin at 23.4% (90bps higher than our estimate) and EBITDA/tn of Rs1,076 (Rs70/tn higher than our estimate) driven by 8% QoQ improvement in realisation (Rs122/tn higher than our estimate). Net sales rose 15.6% to Rs27.8bn (up 2%/1% than our and Bloomberg estimates) and net profit increased 24.2% to Rs4.17bn (up 8.2%/11% than our and Bloomberg estimates). Despite the likely decline in cement prices and subdued demand during the monsoon season, we see strong prospects of earnings upgrade in 2HCY12 following easing cost pressure and a sequential increase in realisation by 8%. Therefore, we retain our Buy rating on the stock with a target price of Rs1,469.

Net sales broadly in line with estimates:

ACC’s 2QCY12 net sales increased 15.6% YoY to Rs27.8bn, primarily driven by a 13.3% YoY (~8% QoQ) improvement in realisation and a 2% YoY cement sales volume growth. For 2QCY12, cement realisation was 4,591/tn, which is 3% higher than our estimate of Rs4,460/tn for CY12E.

Improvement in EBITDA/ tn by Rs148:

EBITDA increased 18.3% YoY to Rs6.5bn (up 6.2% than our/Bloomberg estimates).Despite the rise in overall costs/tn by 11%, EBITDA/tn increased by Rs148/tn to Rs1,076 and EBITDA margin rose by 50bps to 23.4% driven by the increase in realisation by 13.3%. Freight and forwarding costs increased by 19.2% to Rs 949/tn, primarily due to the full impact of increase in rail freight from March’12. Other expenses rose 9.3% YoY to Rs846/tn, but as a percentage of sales declined by 70bps. Power and fuel costs rose 4% YoY to Rs998/tn, but remained flat on a sequential basis.

Net profits beat estimates:

Net profit rose 24.2% to Rs4.17bn, (up 8.2% and 11.2%, respectively, compared to our/Bloomberg estimates), driven by robust      operational performance and higher other income. Other income increased 50% to Rs1.15bn. The company reported an EPS of Rs43 for 1HCY12, which is 55% of the CY12E estimate. Therefore, we believe there are lower prospects of earnings downgrade in 2HCY12.

Valuation:

We maintain our Buy rating on ACC with a target price of Rs1,469 based on EV/EBITDA multiple of 8.5x (~10% discount to past 10 years’ average trading multiple which captures the upcycle/downcycle of cement industry) and implied EV/tn of US$143 (discount of ~5% on  eplacement cost). We believe the EV/EBITDA multiple of 8.5x and replacement cost of US$143 is justified, given the company’s strong  alance sheet and improved profitability on the back of better efficiency.

8.  Hold Bata India. For Target Rs.1,008

Sales Growth Below Estimate;

Downgrade To Hold Revenue growth of Bata India (BIL) slowed to 17% in 2QCY12 compared to 30.6%/22.6% in 1QCY12/CY11, respectively, at Rs5,065mn, 4.1% lower than our estimate. It seems BIL was geared up for slower growth, which is visible from
the fact that inventory days reduced to 96 in 2QCY12 from 102/108 in 2QCY11/CY11, respectively. Following buoyant performance in CY11/1QCY12, the stock price increased 42.9% over the past six months. Third quarter isgenerally a weak quarter for BIL due to the monsoon season. In such a scenario further re-rating seems difficult until BIL resumes its earlier growth trajectory.
Following limited upside from current levels, we downgrade the stock to Hold from Buy. We maintain our estimates and the TP of Rs1,008 based on 16x CY13 EV/EBITDA.

Slower pace of growth:

BIL opened 108/145/61 stores in CY10/CY11/1QCY12, which drove its revenue up by 22.6%/30.6% in CY11/1QCY12, respectively. Compared to 68/145 new outlets in 1HCY11/CY11, BIL has opened over 100 outlets in 1HCY12. However, with high base and lower demand, tentatively due to the monsoon season as per the management, revenue growth moderated to 17% in 2QCY12. Inventory days
increased to 108 in CY11 from 99 in CY10 on account of lower demand and aggressive expansion in 4QCY11. However, BIL appears to be prepared for lower growth which can be seen from the fact that inventory days reduced to 96 in 2QCY12
from 102/108 in 2QCY11/CY11, respectively. We expect the valuation to be capped until BIL resumes its high-growth trajectory. BIL incurred a capex of Rs34mn in 1HCY12, mainly to increase retail outlets.

Better gross margin drove operating margin:

BIL witnessed a drop in gross margin from 3QCY11 to 1QCY12, and even after that it was able to report better operating
margin due to lower employee costs. However, with a better product mix, BIL was able to improve its gross margin by 99bps to 51.5% in 2QCY12, which led to a 86bps increase in operating margin. Following aggressive expansion, lease rent as a
percentage of sales increased by 213/186bps to 10.6%/9.1% in 1QCY12/1HCY12, respectively. It would be difficult for BIL to improve operating margin from the current levels if the pace of revenue growth moderates in 2HCY12.

Valuation:

We expect the valuation of BIL, which trades at CY13E P/E of 23.5x and EV/EBITDA of 14.3x, to be capped until revenue growth resumes its earlier trajectory.

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COPYRIGHT VIKAS PARSHURAM SAMWATSARE 7/12 

vikas parshuram samwatsare

Ignoring concerns, FIIs pumps Rs 8,400 crore in stocks in July

 Foreign investors have poured a little over Rs 8,400 crore into the Indian equity market this month so far sidelining concerns over weak monsoon, slowing economic growth and a high interest rate regime.

After three consecutive months (April-June) of selling, overseas investors infused Rs 8,424 crore into the equity market till July 27, according to the data available with the Securities and Exchange Board of India.

Market experts said foreign investors have sidelined concerns over weak monsoon, slowing economic growth and a high interest rate regime, mainly on hopes that government would initiate fresh reforms initiatives as Prime Minister Manmohan Singh had taken the additional charge of the finance portfolio.

 

Sebi fears small brokers used as front in midcap crash

 

 ome little-known brokers have come under the scanner of market watchdog Sebi for suspected manipulative activities in stocks by spreading rumours about certain listed companies, including a few mid-cap entities whose share prices fell like nine-pins last week.

The regulator is now looking into the possibility of these brokers, whose trading activities have not been material in the past, being used as front entities by some foreign investors, HNI financiers and even company promoters.

According to sources familiar with the matter, Sebi's preliminary investigations into the last week's sharp plunge in some mid-cap stocks have thrown forward certain interesting facts and it could be possible that the rumours could have been spread with an aim to beat down the stocks.