Buy Syngene

Company Background :

Syngene is one of the leading contract research organizations in the country offering a suite of integrated, end-to-end discovery and development services for novel molecular entities across industrial sectors including pharmaceutical, biotechnology, agrochemicals, consumer health, animal health, cosmetic and nutrition companies. The company offers services through flexible business models that are customised to client’s requirements. These range from a full-time equivalent to a fee-for-service model, or a combination thereof.

Syngene delivers its services through a combination of scientific talent, globally accredited systems and R&D infrastructure. At the end of FY15, its tangible fixed assets (gross block) were Rs 931 cr. the company’s laboratory and manufacturing facilities located in Bengaluru are spread over more than 9 lakh sq. ft.  As of May 31, 2015, the company had 2,122 scientists, including 258 Ph.Ds. and 1,665 scientists with a Master’s degree.

Recommendation :

Investors with long time horizon of holding for more than 12 months should consider adding this scrip to their portfolio.  Buy on a weak days around Rs.350 levels and hold for a target of Rs.525

Smart Investor

No.24 Pattamal Plaza
3rd Cross Kammanahalli
BANGALORE 560084

Mobile / Whatsapp -08105-737-966

intellinvestor@gmail.com
www.twitter.com/SmartInvestor

PSU Shares - Gold Mine or Black Hole ?

Dear Investors,

The recent rally in BSE and NSE has given a big boost to the most neglected sector - Public Sector Undertakings.  

BSE PSU Index comprises of 59 scrips out of which 24  belong to Nationalized Banks.  Rest 35 shares belong to core business / manufacturing activities.  Many stocks in this sector are under owned by both FIIs and Domestic Institutions, HNIs for the simple reason that these are thoroughly mis-managed.

The Sector is out of investment radar of large investors due to uncertainty. There are several reasons for the downturn in PSU stocks include decline in net profit and the government's move to sell shares of some of these companies via offer for sale, at a discount to prevailing market price.  Any further equity dilution means - more supply depressing the market price.  FPOs by the government has become a nightmare for the Retail investors as they are now trading at deep discount to their issue price.  

For the smart investors this gives a golden opportunity to buy into high quality stocks at attractive valuations.  The top ten identified by our Research Team is given below :

1. BHEL
2. BPCL
3. BEML
4. Coal India
5. Engineers India
6. GAIL
7. Hindustan Copper
8. Indian Oil
9. NMDC
10. ONGC

Investors should carefully analyze the price movements of these shares besides the Q4 results for 2014 before taking any investment decisions.

Discover how Smart Investors are taking undue advantage of our Share Market Expertise by subscribing to our premium services !!

Smart Investor

Equity Research Division

Ravina Consulting
No.24 Pattamal Plaza
3rd Cross Kamannahalli
BANGALORE 560048

For Stock Advise + Ideas
mail to intellinvestor@gmail.com
Talk / SMS 08105737966

Visit - www.ingeniousinvestor.in
Follow us - www.twitter.com/smartinvestor

Buy - Eros Media on declines

Investors with a short-term perspective can buy Eros International Media at current levels. The stock found support in the band between Rs 105 and Rs 115 in August 2013 after an intermediate-term downtrend. Subsequently, the stock changed direction and has been on a medium-term uptrend. Significant support at Rs 155 and 200-day moving average around this level provided base for the stock’s short-term corrective decline.

On Monday, the stock surged 8 per cent accompanied by above average volume, breaching its 21- and 50-day moving averages. The relative strength index on the daily chart has entered the bullish zone from the neutral region indicating positive momentum. Both daily and weekly price rate of change indicators are hovering in the positive territory implying buying interest. The short-term outlook is bullish. It can extend the uptrend to Rs 187 and then to Rs 191 in the coming trading sessions. Buy the stock while maintaining a stop-loss at Rs 176.

The stock is finding support around Rs.160 and facing stiff resistance beyond Rs.185 which gives a trading range of Rs.25 for the Smart Investor

Smart Investor
Equity Research Division


For Stock Advise + Ideas
intellinvestor@gmail.com
Talk / SMS 08105737966

Visit - www.ingeniousinvestor.in

Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor

BSE Mid Caps - Buy on declines

Dear  Smart Investors,

We are giving  a list of Mid Cap shares that are likely to outperform the broader markets.  The strategy here should be to buy on declines and exit on getting 15 - 20% returns with a holding period of 4-6 weels.

The sharp increase in prices make these ripe for a minor correction this week.  Wait for the dips to enter into these shares.

Smart Investor
Equity Research Division

Ravina Consulting
No.24 Pattamal Plaza
3rd Cross, Kammanahallli
BANGALORE 560084

For Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor
http://www.google.com/profiles/intellinvestor

Tata Global Beverages - Buy on Declines !

We recommend a Buy in the stock of Tata Global Beverages from a long-term horizon. It is apparent from the charts of the stock that after marking a new high at Rs 181 in mid-November 2012, the stock reversed direction. This reversal was triggered by negative divergence in weekly relative strength index and daily moving average convergence divergence indicator. Since then, the stock has been in a short-term downtrend.

Last week, the stock breached its 21- and 50-day moving averages decisively and has been hovering well below them. The stock fell by 3 per cent reinforcing bearish momentum in the previous week. On Wednesday, the stock appears to have breached its key support at around Rs 130 by declining more than one per cent. The daily RSI has entered the bearish zone from the neutral region and weekly RSI is declining in the neutral region. The daily MACD is sloping down, in line with the stock price and featuring in the negative territory implying downward momentum.

Our short-term outlook for the stock is bearish. We expect its decline to prolong and reach our price target of Rs 115 or Rs 124 in next 2 weeks .   After hitting a 52 week high of Rs.181 the stock has been declining which is now near to the 6 months low of 127.

Smart Investors  with long-term perspective can consider buying  the stock with stop-loss at Rs 100 levels.

Smart Investor
Equity Research Division

Ravina Consulting
No.24 Pattamal Plaza
3rd Cross, Kammanahallli
BANGALORE 560084

For Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor
http://www.google.com/profiles/intellinvestor

PC Jewellers - IPO - Apply

Compared to the public issues of Tribhovandas Bhimji Zaveri (TBZ) and Tara Jewels, PC Jeweller’s initial public offering (IPO) is priced lower, at a PE of 9.7-10.5 times FY12 earnings (considering post-issue capital). But that is for a reason.


Though the promoters have more than two decades of experience in the jewellery business, the company is relatively new (compared to its nearest competitors, particularly TBZ) in the jewellery retailing business. Second, its operations are concentrated in the northern region, with Delhi NCR forming 57 per cent of domestic revenue in the first half of FY13. On the flip side, it has reported strong growth in the past, coupled with healthy margins. Growth rates should remain healthy and geographical concentration risk will ease, thanks to expansion. In this backdrop, investors can subscribe to the offer.

The company is engaged in manufacture, retail and export of jewellery, with five manufacturing facilities spread over 83,000 sq ft. Exports (on a wholesale basis to international distributors) formed 33 per cent of revenues in the year’s first half, but its share is expected to go down with a focus on domestic business.

By FY14-end, the company aims to have 50 owned-stores across India, from 30 stores in 23 cities and eight states currently, with addition of 20 stores (half in the western and southern; rest in north and east), which is to be funded through the IPO proceeds. Retail area would also jump 81 per cent from the current 164,000 sq ft. While the expansion should mitigate the geographical concentration risk, establishing a strong brand name (as in northern India) in the new regions might not be easy.

The company’s ‘Jewels for Less’ scheme (50,000 members) started just two years earlier, has seen good response and its policy of ‘full refund’ for jewellery returned within seven days of purchase are positives and should help on this front.

The company has reported rapid and profitable growth in a short span of time, which instils confidence. Says CRISIL in its IPO grading note, “The pace of expansion has been faster compared to other players with addition of 25,000 sq ft every year. The stores have been profitable from the first year of operations."

Apart from expansion, sales growth (CAGR of 70 per cent in FY09-12, highest among its competitors) is also aided due to a focus on wedding jewellery (80 per cent domestic revenues), the largest segment and relatively less affected by slowdown since it is an essential (planned) purchase.

The company’s strategy is to open large formats (average size per store of 5,500 sq ft). Of the 30 stores, 27 have an area of over 3,000 square feet each, which includes 11 showrooms of more than 5,000 sq ft each (four above 10,000 sq ft).

Says Balram Garg, managing director of the company, “The large format reinforces our positioning as trusted jewellery retailer, enabling us to attract a diverse customer base, offers a wide range of jewellery, ensures effective inventory management and provides benefits of scale."

Put together, these moves along with the increasing contribution of diamond jewellery (32 per cent of revenues in the first half from 18 per cent four years ago) have led to higher operating profit margin (OPM) than its peers. And there is further scope for margin improvement. Says Garg, “We are more focused on bottomline growth as it will help expand our network faster." Declining share of exports in total mix will also help. Buying gold on lease basis (against purchase) since inception has ensured less pressure on the balance sheet. All these have helped net profit grow at a faster pace.

Smart Investor 
Equity Research Division

Ravina Consulting

No.24 Pattamal Plaza

3rd Cross, Kammanahallli
BANGALORE 560084

For Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor
http://www.google.com/profiles/intellinvestor

IVRCL - Buy

We recommend a buy in the stock of IVRCL from a shortterm perspective. The stock has strong support at Rs 37 and it bounced off this level in June this year.

The stock once again took support at this level towards the end of August and after hovering here for two weeks, it reversed higher on Friday. The stock is up 15 per cent in the last two sessions signallingthe onset of a short-term uptrend.

It has moved above its 21- as well as 50-day moving averages. Momentum indicators such as daily relative strength index have moved into the bullish region implying that the up-move can continue in the shortterm.

The stock can move up to Rs 46.7 and then Rs 48.2 in the near-term. Short-term investors can buy the stock with stop at Rs 35

Bought to you by

Smart Investor

Equity Research Division 

Ravina Consulting

Pattamal Plaza

3rd Cross Kamanahalli

BANGALORE 560084

For Free Stock Advise + Ideas

sowmya@ravinaconsulting.com

Talk / SMS 08105737966 

Follow us -

www.twitter.com/smartinvestor

Read - www.ingeniousinvestor.blogspot.com

Like us - www.facebook.com/IngeniousInvestor

Buy - Sun Pharma Advanced

We recommend a buy in the stock of Sun Pharma Advanced Research Company from a long-term horizon. It is seen from the charts of the stock that it has a significant long-term support in the base band between Rs 75 and 87. In the past, the stock has consistently reversed upwards whenever it had tested the aforesaid support band. 

Similarly, the stock took support from this support level in mid-June this year and bounced up. Since then, the stock has been on a modest medium-term uptrend. The stock surged 10 per cent with good volume, emphatically breaching its moving average compressions (21-, 50- and 200-day moving averages) at Rs 79 and its immediate resistance around Rs 95 on Tuesday.

We observe that there is an increase in daily volume in the past two trading sessions. The daily relative strength index is featuring in the bullish zone and weekly RSI is on the brink of entering this zone from the neutral region. The daily moving average convergence divergence indicator has signalled buy and is about to enter positive terrain.

We are bullish on the stock from a short-term perspective. We expect its rally to prolong and reach our price target of Rs 110 in the months ahead. Traders with near-term perspective can buy the stock with stop-loss at Rs 90 levels.

Bought to you by

Smart Investor

Equity Research Division 

Ravina Consulting

Pattamal Plaza

3rd Cross Kamanahalli

BANGALORE 560084

For Free Stock Advise + Ideas

sowmya@ravinaconsulting.com

Talk / SMS 08105737966 

Follow us -

www.twitter.com/smartinvestor

Read - www.ingeniousinvestor.blogspot.com

Like us - www.facebook.com/IngeniousInvestor

Sell Bharath Forge

We recommend a sell in the stock of Bharat Forge from a short-term perspective. It is apparent from the charts of the stock that following a medium-term downtrend from its May 2012 peak of Rs 347, the stock took support at around Rs 275 last month. This support level also coincides with the 61.8 per cent fibonacci retracement level of the stock's prior up move. After testing the support at Rs 275, the stock bounced up. 

The stock's reversal is backed by a positive divergence in daily relative strength index and daily price rate of change indicator. Moreover, the stock breached its immediate resistance as well as 21-day moving average at around Rs 290 by gaining almost 3 per cent on Saturday. Both daily and weekly relative strength indices are moving higher in the neutral region towards the bullish zone. The daily price rate of change indicator has entered the negative territory implying buying interest. The daily moving average convergence divergence indicator has signalled a sell. 

We are bearish on the stock from a short-term perspective. We expect the stock’s down move to continue and reach our price target of Rs 250 or Rs 225 in the November month. Traders can consider buying the stock around 250 while maintaining stop-loss at Rs 230 levels.

Bought to you by

Smart Investor

Equity Research Division 

Ravina Consulting

Pattamal Plaza

3rd Cross Kamanahalli

BANGALORE 560084

For Free Stock Advise + Ideas

sowmya@ravinaconsulting.comTalk / SMS 08105737966 

Follow us -

www.twitter.com/smartinvestor

Read - www.ingeniousinvestor.blogspot.com

Like us - www.facebook.com/IngeniousInvestor

Bata India - Buy on declines

"Bata India Ltd. (BIL) focused on premium products and sacrificed volume, which grew by a mere 1.1% in CY11. It has started focusing again on volume and as a result, volume grew 14% in 1QCY12. As per the management, volume growth is expected to remain in double-digits in CY12. Strong volume growth along with higher realisation (due to better product mix) should result in revenue growing 20.0-25.0% as against our estimate of 19.7% in CY12E. Revenue has already grown by a robust 30.6% in 1QCY12. The management is confident of doubling its revenue in the next four-five years."

"BIL opened ~67 new outlets (including Hush Puppies stores) in 1QCY12. It set up ~25 more stores in 2QCY12 and new store addition has already touched ~92 in 1HCY12, which is expected to be ~150-170 by the end of CY12. Of the total 146 outlets opened in CY11, around 53% were opened in 2HCY11, which resulted in high inventory and lower revenue from these outlets in CY11. Currently, BIL is front-loading the setting up of new outlets and out of the total target of ~150-170 outlets planned in CY12, it has already opened ~92 outlets in 1HCY12. BIL has started bar-coding its products and currently 60-70% of its products are bar-coded. As a result, BIL would be able to report healthy revenue growth and also control its inventory in CY12. BIL plans to incur a capex of Rs1,000mn - ~Rs700mn in retail and ~Rs300mn in upgrading its manufacturing facility - in CY12E."

"Footin, owned by BSO (Bata Shoe Organization), is very popular in Thailand, Bangladesh etc, catering to college-going youth in the range of 15-25 years. BIL launched Footin in India in 1QCY12, with its USP being contemporary designs at an affordable price of Rs500-700/pair. In order to de-link Bata’s brand image, BIL is setting up exclusive Footin outlets of 1,000-1,500 sq ft. It has already opened nine Footin outlets till now in Delhi and Mumbai, where the response has been excellent. Currently, the exercise is more of a trial and if the response stays buoyant, BIL plans to aggressively open Footin outlets in the next two-three years. BIL is also very bullish on kids and women segments and is looking at launching new brands, either BSO-owned or strong in-licensed brands, in India."

Valuation

"We expect BIL, which trades at CY13E P/E of 22.3x and EV/EBITDA of 13.5x, to witness a further re-rating. On the back of strong revenue/net profit CAGR of 18.8%/31.2%, respectively, likely over CY11-13E, BIL would continue to trade at premium multiples. The stock is attractively priced, with a PEG ratio of 0.87x CY12E," says Nirmal Bang research report.

Recommendation  

Bata was quoting around 530 levels on Jan 2, 2012 and has so far given investors a decent 60% appreciation.  There is more steam left in the stock as we believe it is likely to cross Rs.1000/- levels.

Smart Investor
Equity Research Division

Ravina Consulting
No.24 Pattamal Plaza
3rd Cross Kamanahalli
BANGALORE 560084

For Free Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966

Stides Arcolab - Buy on declines

Strides Arcolab, a Bangalore-headquartered pharma company has sold its subsidiary Ascent Pharmahealth at an enterprise value of AU$ 375 million (about Rs 1,968 crore) to Watson Pharmaceuticals. The company is currently going through a restructuring phase. 

Strides had acquired a majority stake (50.1 per cent) in Australia-based Ascent Pharmahealth in August 2008. According to the news agency Reuters, this acquisition was valued at the price of AU$ 65 million (about Rs 260 crore). The company later had increased its shareholding up to 60.3 per cent. 

Ascent is one of the leading generics company in Australia. This company also has nine subsidiaries in countries like New Zealand, Singapore, Hong Kong, Malaysia and Brunei.  Ascent brought about 33 per cent of the revenues of Strides in CY2010. Ascent has grown by a healthy five-year compounded annual growth rate (CAGR) of 30 per cent in the topline. For the year 2010 the company reported sales of AU$ 132.3 million (about Rs 550 crore) while its net profit remained AU$ 12 million (about Rs 50 crore).

Its EBITDA margins remained at about 13 per cent, lower than the EBITDA margins of Strides (22 per cent) in the same year. For the year 2010 the company showed a growth rate of 26 per cent in topline and 30 per cent in the bottomline. This high growth has mainly arisen due to the high growth rates in the Australian pharma market. 

The Australian government has proposed a cut of 23 per cent in the pharma product prices from April 2012. Though the company is leading player in the Australian generics market, we believe that this would impact the margins of Ascent. 

Looking at the value that Strides has got for selling Ascent, we believe it will have a good impact on its balance-sheet. Its total debt as of June 2011 half-yearly result was Rs 2,419.51 crore. The company paid Rs 90 crore as half-yearly interest expense which works out to be Rs 180 crore of annual interest payment in 2011. Its interest cover ratio as per the same statement works out to be 2.15 which has decreased from 2.97 in the same period last year. Its debt to equity ratio stood at 0.74 in June 2011. In our opinion company will use the amount received from the Ascent deal to pay the debt and bring these ratios down. 

The company recently has also said that it will mainly focus on the injectable and specialties segment in which it has recently received many USFDA approvals. As we see it, the company is in a very good shape to take the benefit of these approvals in the coming years. Strides’ specialties division, Agila, is also doing well. In 2010 its revenues rose by 84 per cent and contributed about 39 per cent to the topline and 32 per cent in the EBITDA. 

Our Recommendation :
With the good price received for Ascent and many new products in the pipeline we believe that this stock will be an attractive bet going ahead. Investors could start looking to accumulate the stock during the dips.


Investors should buy the scrip on all declines to Rs.400 levels and target for a Rs.600 with a holding period of 12-15 months.



Bought to you by


Ingenious Investor
Equity Research Division


Ravina Consulting
Pattamal Plaza
3rd Cross Kamanahalli
BANGALORE 560084


For Free Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966


Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor

BSE / NSE Weekly Review 20 Jan 2012

High volatility is expected in a truncated week ahead as traders roll over positions in futures & options segment as the January F&O contracts expire on 25th January 2012. The stock markets will remain closed on 26th January 2012, on account of Republic Day.

The RBI is widely expected to keep its key lending rate viz. the repo rate steady at the Third Quarter Review of Monetary Policy, scheduled on 24th January 2012, as headline inflation remains high. Investors’ focus is on Q3 results as well. The Q3FY12 results are likely to be weak due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges. The focus will be on guidance from  the company managements on outlook for the remaining part of the year and for the next year.

Some of the companies declaring their results in the next week include L&T, Maruti Suzuki India, Sterlite Industries, Idea Cellular, GAIL and Kotak Mahindra Bank on 23rd January. Lupin, Cairn India, Grasim and Biocon on 24th January. Bank of Baroda, Sesa Goa, Union Bank of India, Rural Electrification orporation, Indian Hotels and Tata Communications on 25th January. Blue Star, NHPC, BHEL, NTPC, Bank of India and Canara Bank on 27th January




Indian Markets 
Strong results from HDFC Bank, ITC, Bajaj Auto, Wipro, TCS, HCL Technologies and Hero MotoCorp, and sustained buying by foreign funds pushed key benchmark indices to their highest level in more than six weeks. The S&P CNX Nifty moved past the psychological 5,000 level. Firm global stocks underpinned sentiment. The market gained in four out of the five trading sessions during the week ended 20th January 2012. Foreign institutional investors (FIIs) bought shares worth Rs 4441.37 crore in eight trading sessions from 10 to 19 January 2012, as per provisional data from the stock exchanges.

The BSE Sensex rose 584.39 points or 3.62% to 16,739.01, its highest closing level since 7 December 2011. The S&P CNX Nifty gained 182.60 points or 3.75% to 5,048.60, its highest closing level since 7 December 2011. The BSE Mid-Cap index rose 1.75%


Strong results from HDFC Bank, ITC, Bajaj Auto, Wipro, TCS, HCL Technologies and Hero MotoCorp, and sustained buying by foreign funds pushed key benchmark indices to their highest level in more than six weeks. The 50-unit S&P CNX Nifty moved past the psychological 5,000 levels. Firm global stocks underpinned sentiment. The market gained in four out of the five trading sessions during the week ended Friday, 20th January 2012.

Gains in world stocks triggered by stronger-than-expected GDP growth in China, the world's second biggest economy, in the fourth quarter of 2011, strong Q2 December 2011 results from IT major HCL Technologies and data showing buying of Indian stocks by foreign funds over the past few days, triggered a rally on the domestic bourses.

Trading for the week began on a positive note. Key benchmark indices registered small gains to reach 5-1/2-week closing highs on Monday, 16 January 2012 as the headline inflation hit 2-year low. This reinforced expectations that the central bank could start cutting interest rates in the coming months to revive slowing economic growth. The BSE Sensex rose 3.62% to 16,739.01and The S&P CNX Nifty gained 3.75% to 5,048.60, its highest closing level since 7 December 2011. The BSE Mid-Cap index rose 1.75% and the BSE Small-Cap index gained 1.71%. Both these indices under performed the Sensex.

Realty: 
The BSE Realty index rose 7.97% to close at 1708 levels. Among the heavyweights, Unitech, DLF, Oberoi Realty and HDIL gained 11.9%, 8.8% 8.7% and 8.3% respectively. India's largest realty firm by net profit DLF rose 8.8%. The company is reportedly planning to sell a convention centre project in Delhi and its wind power business for about Rs 1800 crore early next fiscal to reduce debt.

Metals: 
The BSE Metals index rose 4.10% to close at 11198 levels. All the industry majors were gainers. Hindaclo, Jindal Steel, Tata Steel and Coal India rose 7.7%, 6.4%, 5.0%, and 0.1% respectively.Metal stocks rose as data showing China's manufacturing gauge remaining in contraction mode in January 2012, boosted case for monetary policy easing in the world's second largest economy. Tata Steel rose 5.0%. The company  secured a major contract from Siemens Wind Power to supply 25,000 tonnes of high-quality profiled steel plate for wind towers.

Oil & Gas:  
The BSE Oil & Gas index rose 6.4% to close at 8325 levels. Among the heavyweights, Reliance, ONGC and Cairn India gained 8.4%, 5.9%, and 2.8% respectively. Reliance Industries jumped 8.4%. The stock surged after company said its board will consider a proposal for buyback of equity shares along with Q3 December 2011 earnings on Friday, 20th  January 2012. The last buyback program by RIL was done in the year 2004. Then, the company could only deploy around 5% of its planned purchase as the stock price had zoomed quite high.

Capital Goods: 
The BSE Capital Goods index rose 5.49% to  close at 9807 levels. Among the heavyweights, L&T, Siemens, and Bhel gained 8.6%, 4.1% and 2.6% respectively. Capital goods stocks rose on bargain hunting after a steep decline last month. India's largest power equipment maker by sales BHEL gained 2.6%. The company unveils its Q3 results on 27th January 2012. Larsen and Toubro is likely to register a 10%  growth in sales from its automation business in the next financial year

Bankex: 
The BSE Bankex index rose 5.9% in the week to close at 10912 levels. All the large players, namely SBI, Axis Bank, ICICI Bank, and HDFC Bank were gainers, gaining 8.7%, 7.3%, 6.7% and 4.1% respectively. Interest rate sensitive banking stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. HDFC reported 31.4% growth in net profit to Rs 1429.70 crore on 35.6% increase in total income to Rs 8622.64 crore in Q3 December 2011 over Q3 December 2010. Bank said its asset quality remains healthy. The bank's capital adequacy ratio (CAR) remained strong at 16.3% as on 31 December 2011, against he regulatory minimum of 9%


Bought to you by

Ingenious Investor
Equity Research Division

Ravina Consulting
Pattamal Plaza
3rd Cross Kamanahalli
BANGALORE 560084

For Free Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor

www.facebook.com/ingeniousinvestor

Q2 Results will disappoint markets

India Inc is likely to post a muted earnings growth for the second quarter of this fiscal, largely due to fall in rupee value, rising interest costs, high inflationary pressures and a global economic slump. The analysts expect the rupee's sharp depreciation alone to impact the corporate earnings by an average of 3-5 per cent, on account of losses suffered due to their forex exposure such as overseas loans.

Besides, the global economic slowdown, as also headwinds in domestic macroeconomic scenario, might have a ripple effect on the companies' second-quarter financial results, they said. Investment banking and equity research major CLSA said in its Q2 earnings preview report that the sharp depreciation of rupee is likely to significantly impact the earnings of companies with unhedged foreign currency liabilities. "Overall earnings growth would be muted due to the one- time impact of rupee depreciation, estimated at 3 per cent of earnings," CLSA said.

Brokerage firm Religare Capital also said that the signs of economic slowdown were expected to be reflected in the Q2 results and the Sensex companies could report a profit growth of less than 9 per cent for the quarter. Religare Capital expects good Q2 figures in the IT, banking, FMCG, cement and pharma sectors, while companies in the real estate, telecom, power and metal space could post disappointing results. Excluding the oil companies, the Q2 earnings growth for the Sensex companies could fall to below 5 per cent, as per Religare Capital estimates.

CLSA has estimated an earnings growth of 7 per cent for the Sensex companies for the second quarter. Interestingly, the earnings growth of the Sensex companies before taking into account exceptional items such as forex losses is estimated at over 13 per cent as per CLSA. The earnings season for the second quarter of the current financial year will commence when IT bellwether Infosys would declare its result on October 12. The country's most valued firm RIL is scheduled to announce its results on October 15.

The Q2 results are likely to act as the next trigger for the stock market, where its benchmark Sensex index has dropped by about 14 per cent in the second quarter. CLSA said that the rising interest costs was likely to have affected the margins across the board, making funds costlier for the companies. It said that the full impact of higher interest costs would be visible from the second quarter onwards and could become a potential source of disappointments.

Making things worse for the corporates, inflation remains at high level despite softening commodity prices, and this has already led to the Reserve Bank hiking its key rates 12 times in the past 18 months to control the price rise. "While the RBI's hawkish policy has now started hurting business growth, inflation remains meaningful despite the recent softening in commodity prices. Early to say if margins are reverting and if the earnings cycle has bottomed out," Religare said.

As per CLSA, the depreciation in rupee value -- of 10 per cent against the US dollar and 15 per cent against the Japanese yen -- would be another dampener for Q2 results. CLSA said that companies like Lanco, Ranbaxy and Tata Power were likely to report loss on this account in Q2, while the numbers could also be impacted of firms like Bharti Airtel, PFC, Suzlon, L&T, Tata Motors, Tata steel, JSW steel and a host of IT companies.

Brokerage firm Unicon Financial further cautioned that issues like shortage of fuel and environmental clearances also remain a major concern for the power sector. "The power ancillary companies are expected to post robust earnings on the back of strong order book. However new order inflows for these companies remains slow," it said.

Prabhudas Lilladher:

``We expect consensus downgrade to continue in the current quarter. It is skeptical about double digit earnings growth of FY12 and anticipates consensus earnings cut of 3-5% in Jul-Sep 2011 for the current fiscal. Earnings for Nifty are likely to grow by 8.6% (vs Cons.: 11.7%) YoY for FY12, whereas for FY13 growth is expected to be 15.1% (vs Cons.: 16.1%) YoY. We expect PAT (FY12e) for Nifty to grow by 14.7% YoY, against consensus expectation of 19.6% YoY growth. Moreover, for FY13 we are maintaining the growth momentum stable at 14.1% YoY growth, versus deceleration in consensus momentum to 16.2% YoY growth. We are expecting growth contribution to come from BFSI, Technology, and FMCG for FY12 and FY13, however we expecting mid to high single digit growth in Auto, Metals, Telecom and Cement.

Revenue growth of NIFTY companies (excl. Oil & Gas) would show a sharp drop to 15.5% in Q2FY12 YoY from 21.5% in the preceding quarter. This would mark the lowest QoQ growth in last 18 months. PAT growth continues on a downward trajectory and expected to post an anaemic 6.8% growth YoY, the lowest in 18 months. For companies under our coverage, Revenue and PAT are expected to grow YoY by 21.9% and 10.8%, respectively and QoQ by 5.2% and 3.4%, respectively. EBITDA margin (ex-BFSI) is expected to decline by 149bps YoY and 45bps QoQ. Elevated raw material costs, slackening demand due to uncertainty in macro environment and high interest rates are expected to impact the margins of Corporate India.``

Motilal Oswal:

``2QFY12 earnings will be reported amidst an adverse macro backdrop. Interest rates are up further 50-75bp during the quarter, demand continued to weaken in domestic economy and India rupee depreciated by ~10% against the USD. Aggregate (ex RMs) Sales growth 20.9%, EBIDTA growth 11.7%, PAT growth 9.7%. EBIDTA margin will contract 190bp YoY to 23.6% (2nd lowest in last 8 years), PAT margin will contract 120bp YoY to 12.7% (lowest in last 8 years).

Number of companies with growth rates of over 30% is the lowest at 19%, while percentage of companies with YoY decline is at a 8 quarter high of 33%.

Top 3 contributors to aggregate earnings are Financials, Oil & Gas and Metals, accounting for 57% of the 2QFY12 earnings.

Sectors with strong YoY PAT growth include Cement (67% YoY due to low base effect), Private Banks (+23% YoY) and Oil & Gas (excl. RMs) 21% YoY. FMCG, Private Banks and Retailing are the only 3 sectors where all companies will report earnings growth. Sectors with disappointing / muted growth are PSU Banks, Telecom, Autos. Telecom with a decline of 44% shaves off 200bp from aggregate growth.``

ICICI Securities:

``The I-direct coverage universe (ex- BFSI) is expected to post a YoY revenue growth of 21.3% while QoQ growth would be modest at 2.1% since Q2 is a cyclically weak quarter for most sectors. At the same time, EBITDA growth of 7% YoY will not mirror the revenue growth as most of the companies under coverage will face the full blown impact of high input prices and rise in other operating expenditure. This, we believe, will impact operating margins by 215 bps to 16.1% in Q2FY12. Even though topline and operating profits will register positive growth rates, profitability will come under pressure due to the unabated hike in key policy rates by the RBI. Hence, we estimate an 11.4% YoY decline in net profit for our coverage universe for Q2FY12. This performance would be slightly better as PAT, excluding oil & gas, would decline 6.5% YoY. What will be highly crucial to determine during the quarter would be whether the earnings downgrade cycle gets intensified as we face significant local and macro headwinds? As of now, we expect the broader market earnings to grow at 11% CAGR over FY11-FY13E.``

Angel Broking:

``Margin pressures have dented the profitability of Indian corporates over the past few quarters and are likely to continue in 2QFY2012 as well. While top-line growth for Sensex companies is expected to remain healthy at 21.1% yoy (muted 2.6% qoq), margin pressures are likely to result in PAT growth falling to sub-10% (at 8.2%) level. However, on a sequential basis, both operating and net profit margins are expected to improve, albeit marginally. Earnings expected to grow at 7.4% yoy, driven by 18.6% yoy top-line growth.`

Bought to you by

Ingenious Investor
Equity Research Division

Ravina Consulting
Pattamal Plaza
3rd Cross Kamanahalli
BANGALORE 560084

For Free Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor

 

BSE / NSE Weekly Review 2 Sept 2011

A deluge of buying interest throughout the holiday-truncated week resurrected the markets from the malaise of the previous month. Snapping the tumultuous five successive weeks of losses, the Sensex bounced back in style to surge by 972 points or 6.1% to 16,821 and ditto with the Nifty, which jumped 292 points or 6.1% to 5,040. The mid-cap index rose 4.8% at 6324 and small-cap index rose 3.2% at 7133. The metal index soared by 11.5% at 12,549, while the realty index jumped by 10% at 1,769 and banking index gained by 6.8% at 10,949.

The market got off to a flying start on Monday on receding fears of recession in the US following an optimistic assessment of the US economy by Fed chairman Ben Bernanke on August 26. The end of a standoff between the government and anti-corruption crusader Anna Hazare over the previous weekend also aided the positive sentiment.  The BSE Sensex jumped nearly 600 points and there was no looking back from thereon.
The strong Q1 June 2011 GDP growth data maintained the tempo on Tuesday; the Sensex jumped by another 260 points as the latest data showed that the economy expanded 7.7% in Q1 June 2011 from a year earlier, helped by strong growth in the services sector. The manufacturing sector grew an annual 7.2% in Q1 June 2011 and farm output rose an annual 3.9%, the data showed.

Neither the holidays bang in the middle of the week nor the double-digit food inflation numbers were enough to break the momentum. The markets were shut on August 31 on account of Ramzan and September 1 due to Ganesh Chaturthi. And food inflation touched the double-digit mark after a gap of over five months. It was at 10.05% for the week ended August 20, as onion, fruits, vegetables and protein-based items turned expensive. The prices of onion soared by 57.01% year-on-year, while that of potato rose by 13.31% during the week under review.

Taking from where they had left, the key benchmark indices logged gains for the third consecutive session on Friday as domestic bourses played a catch-up with their global peers to sign off what was the best week in the past two years.

India's largest real estate developer by market capitalisation DLF jumped 18.28% to Rs 208 to top the gainers list on the BSE on plans to sell its holding in the joint venture company which is undertaking the DLF IT Park, Noida project. Tata Steel gained by 15.6% at Rs 488 post its steep recent fall triggered by concerns the ongoing euro-zone debt crisis will impact its European operations. And index heavyweight RIL recovered from a 52-week low of Rs 713.55 touched on August 26 to advance 11.9% to Rs 805 after announcing the completion of BP's acquisition of a 30% stake in 21 oil and gas production sharing contracts that RIL operates in the country, including the KG D6 block.

In the midcap index, Manappuram Finance soared by 29% at Rs 56, Glodyne Technology raced ahead by 17.7% at Rs 321 and State Bank of Mysore added 17.4% at Rs 670. And the smallcap space saw the likes of Fineotex Chemicals jumping by 29.4% at Rs 328, ICSA India gaining 21.8% at Rs 77 and Man Industries adding 20% at Rs 149.

In the metals space, JSW Steel topped the gainers charts by adding a whopping 18.5% at Rs 720. Tata Steel gained 15.6% at Rs 488 and Jindal Steel added 13.6% at Rs 525. Sesa Goa, Hindustan Zinc and Hindalco added between 10% and 12% each. DLF soared by 18.2% at Rs 208 to take the realty space by storm. Among the other prominent gainers in this space, Parsvnath Developers gained by 17.4% at Rs 54 and Phoenix Mills added 10.4% at Rs 219. The banking space saw ICICI Bank jumping by 8.1% at Rs 887, Yes Bank gaining 7.5% at Rs 278 and HDFC Bank adding 7.4% at Rs 471.

In an indication of the buying fury that gripped the markets during the week gone by, ONGC was the only Sensex stock to end the week in the red, shedding 5% at Rs 263.

The next week would reveal whether the corrective rally still has some steam left on the upside. However, the developments on Wall Street on Friday do not augur well for Monday's market opening back home. US stocks tumbled 2% after data showing zero jobs growth in August brought investors face-to-face with the prospect of another recession. The Dow Jones sunk 253 points and Nasdaq Composite was down 65 points on the last day of the week. Moreover, the markets will also start factoring in the outcome of the next scheduled on September 16.  In the last policy meet, the central bank had hiked the repo and reverse repo rates by 50 bps each, more than market expectations.

Source : Business-Standard

Bought to you by

Ingenious Investor
Equity Research Division

Ravina Consulting
Pattamal Plaza
3rd Cross Kamanahalli
BANGALORE 560084

For Free Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor

OnMobile Global - Buy on dips

IIFL is bullish on OnMobile Global and has recommended buy rating on the stock with a target of Rs 136 in its June 7, 2011 research report.

“OnMobile Global has deployed its infrastructure to supports 3G products like video on demand & IVVR on several operator networks. However, the initial 3G revenues consists of charges for mobile broadband and operators are yet to cover pan-India, which implies product usage (& hence revenues) would take some time to fructify for OnMobile. Moreover, telcos have diverted a sizable chunk of ad spends towards creating awareness on 3G services which has had an impact on VAS promotional activity. Company has indicated such a phenomenon has a temporary dampening effect on revenues, but is unlikely to lead to any long-term structural shift away from VAS.”

“OnMobile is now live in 6 Latin American countries, as part of its Telefonica deployment and covers 80-85% of population. It has achieved ~1.5% penetration rate in large markets like Brazil, Mexico & Argentina; encouragingly, Lat-Am RBT ARPUs are ~2-3x that for India. International revenues have also risen from 25% to 32% in the past 4 quarters, which helps diversify what is hitherto an India-centric business. Q4 FY11 domestic revenue fell 12% qoq due to a change in the contractual scope whereby content management was removed from its responsibilities at a major telco, leading to a ~10% qoq contraction in topline; Ex-such change, sequential revenue is flat-company attributed this to a seasonally lean period for capex orders at its European units and newly acquired Dilithium (video products) business as well as weakness in European economy. We believe Q4 results do not form part of broader trend and expect growth momentum to resume as international revs ramp up led by Telefonica deployments.”

“OnMobile is set to report increased traction in revenues driven by leadership in domestic business and upsides from Telefonica and Vodafone deals. It has guided for Rs600-800mn in capex in the current fiscal, comfortably supported by ~Rs1.9bn in operating CF in FY12. Stock trades at 9.8x FY13 PER which provides an attractive entry point, in our view; maintain Buy for a target price of Rs 136,” says IIFL research report.

Our Recommendation :

The stock gave negative results in the last 1 year (Co gave a bonus of 1:1 ratio)

Time Span Price Change %Change

Today 74.25 -13.15 -15.04

Week 91.80 -4.40 -4.79

Month 109.15 -21.75 -19.92

Three Months 112.20 -24.80 -22.10

Six Months 112.10 -24.70 -22.03

One Year 143.93 -56.53 -39.27

The performance for the quarter is below market expectations and has seen huge sell off resulting the stock hitting 52 week low of Rs.72. Investors can look to buy the stcok in case of further correction to Rs. 50 levels as the outlook for the services of the company remain robust.

Bought to you by

Ingenious Investor

Equity Research Division

Ravina Consulting

Pattamal Plaza

3rd Cross Kamanahalli

BANGALORE 560084

For Free Stock Advise + Ideas

sowmya@ravinaconsulting.com

Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com

Follow us - www.twitter.com/smartinvestor

BSE / NSE Sectoral Analysis 1st July 2011

Banking, metal shares lead rally

Aggressive buying by foreign institutional investors (FIIs) and easing of Greece's debt worries triggered a strong rally on the domestic bourses, with the key benchmark indices surging to their highest level in more than 8 weeks. The market rose in four out of five trading sessions during the week ended Friday, 1 July 2011. Concerns of a disorderly debt default from Greece eased after the government's austerity program was passed in the parliament on Thursday, 30 June 2011.

The Sensex jumped 522.12 points or 2.86% to 18,762.80 in the week ended 1 July 2011. The BSE Mid-Cap index jumped 229.97 points or 3.45% to 6,901.67. The BSE Small-Cap index surged 302.03 points or 3.81% to 8,224.41. Both the BSE Small-Cap and Mid-Cap indices outperformed the Sensex.

Trading for the week began on an upbeat note as the key benchmark indices surged for third straight day on Monday, 27 June 2011, as a slide in global crude oil prices outweighed concerns that an increase in domestic fuel prices will stoke inflation. The BSE Sensex rose 171.73 points or 0.94% to settle at 18,412.41, its highest closing since 7 June 2011.

Key benchmark indices advanced for the fourth straight day on Tuesday, 28 June 2011, as the latest data showed that foreign institutional investors (FIIs) had stepped up buying of Indian stocks. The BSE Sensex rose 80.04 points or 0.43% to settle at 18,492.45, its highest closing level since 7 June 2011.

The market extended its winning streak to the fifth straight day on Wednesday, 29 June 2011, as world stocks rose, buoyed by hopes that the Greek parliament will vote in favor of additional austerity measures. The BSE Sensex jumped 201.41 points or 1.09% to 18,693.86, its highest closing level since 2 May 2011.

Key benchmark indices extended their winning streak into the sixth straight day on Thursday, 30 June 2011, attaining their highest closing level in more than 8-weeks, as data showing sustained buying by foreign funds over the past few sessions, firm global stocks and easing of food inflation in mid-June 2011 boosted sentiments. The BSE Sensex surged 152.01 points or 0.81% to settle at 18,845.87, its highest closing level since 2 May 2011

The market snapped 6-day winning steak on Friday, 1 July 2011, as investors booked profits after the Sensex jumped more than 7% the preceding six trading sessions. Index heavyweight Reliance Industries (RIL) and Bharti Airtel, led the decline. The BSE Sensex shed 83.07 points or 0.44% to 18,762.80.

Metal stocks rose as metal prices recovered on the London Metal Exchange after an earlier steep fall. Hindalco Industries jumped 7.8% to Rs 186.40 during the week. Sterlite Industries jumped 6.08% to Rs 170.10.

Tata Steel jumped 4.03% to Rs 602 after the company's managing director Hemant Nerurkar on Tuesday, 28 June 2011, said operating profit at the company's European unit will rise by two-thirds of its current level to $100 a metric tonne over the next three years. Tata Steel Europe generates earnings of $60 per tonne before interest, tax, depreciation and amortization at present. Nerurkar said higher operating margin at the European unit will be driven by increase in value-added products and control over costs.

India's largest engineering and construction firm by sales Larsen & Toubro gained nearly 4% to Rs 1,807.75 on a recent strong flow of new orders for the firm.

Bank stocks rose as the latest data showed that credit offtake remains strong. Credit offtake from banks grew by 20.9% to over Rs 41 lakh crore during the one-year period ended 17 June 2011. According to the RBI data, credit offtake during the period stood at Rs 41.23 lakh crore against Rs 34.10 lakh crore in the same period of the previous year.

India's biggest commercial bank in terms of branch network State Bank of India vaulted 5.8% to Rs 2,421.10. HDFC Bank jumped nearly 5% to Rs 2,496.90 on expectations of strong Q1 June 2011 earnings. ICICI Bank rose 2.7% to Rs 1,094.70 after the private sector bank's chief financial officer N.S. Kannan, said in a media interview that the bank aims to grow its loan book by 18%-20% in the current financial year.

Auto stocks rose as the hike in diesel price of Rs 3 per litre announced by the government after trading hours on Friday, 24 June 2011, was lower than market expectations of a hike of Rs 4 per litre. Tata Motors gained 3.09% to Rs 994.50 and M&M rose 2.8% to Rs 691.30.

NTPC rose 2.1% to Rs 186 after the company said a unit of 660 megawatt (MW) of Sipat Super thermal power project was commissioned on 28 June 2011. With this, the total capacity of NTPC group has become 34,854 MW. This is the first super-critical 660 MW unit of NTPC which has been added to the capacity. With the coming of this unit, the total installed capacity of Sipat super thermal power project has become 1,660 MW.

FMCG stocks rose on expectations that a strong monsoon will boost demand from rural areas and also reduce input prices. FMCG giant Hindustan Unilever rose nearly 4% to Rs 336.75 and cigarette major ITC gained 3.4% to Rs 201.70.

IT pivotals gained on expectations of good Q1 June 2011 results. TCS rose 4.4% to Rs 1,186.35 and Infosys gained 2.5% to Rs 2,934.30. The National Association of Software and Services Companies (Nasscom) recently reiterated its forecast of a 16%-18% growth in export revenue for IT outsourcing services in this fiscal year that began on 1 April 2011.

The Reserve Bank of India (RBI) has decided to allow companies to issue equity and preference shares under the government's foreign direct investment scheme to fund certain transactions. The clearance is for imports of capital goods and other machineries and equipment, the central bank said in a release. All such conversions of import payables into foreign direct investment should be completed within 180 days from the date of the shipment of goods.

The wholesale price index for primary articles fell 0.4% to 197.4 in the week ended 18 June 2011 from a provisional 198.1 in the previous week, according to the latest data issued by the Ministry of Commerce and Industry. On a year-on-year basis, prices of primary articles were up 11.84%, slower than the 12.62% rise recorded in the week ended 11 June 2011, the data showed. In the week to 18 June 2011, the food articles index decreased 0.8% to 189.8 from 191.3 in the previous week. The year-on-year inflation for food articles decelerated sharply to 7.78% from 9.13%. The fuel products index rose 0.2% to 160.2 in week ended 18 June 2011 from 159.9 in the previous week.

Going ahead, the inflation may remain high due to the recent hike in diesel, kerosene and LPG prices. The Indian government on 24 June 2011 announced a hike in the price of diesel by Rs 3 a litre, kerosene Rs 2 a litre and cooking gas by a steep Rs 50 a cylinder.

Our Recommendation :

Hot Sectors - Metal, Banking, FMCG and Pharma

Weak Sectors - PSU, Oil & Gas, IT

Bought to you by

Ingenious Investor
Equity Research Division

Ravina Consulting
Pattamal Plaza
3rd Cross Kamanahalli
BANGALORE 560084

For Free Stock Advise + Ideas
sowmya@ravinaconsulting.com
Talk / SMS 08105737966

Read - www.ingeniousinvestor.blogspot.com
Follow us - www.twitter.com/smartinvestor