Market Outlook 27th April 2012

8/2/2019 Market Outlook 27th April 2012

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Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539 1

Market OutlooIndia Research

April 27, 2012

Dealer’s Diary

The Indian markets are expected to open flat to negative, tracing mixed opening in

the major Asian bourses and flat opening in the SGX Nifty.

Globally, U.S. stocks moved mostly higher over the course of the trading day on

Thursday, adding the gains posted in the previous session. The markets benefited

from upbeat housing data, which helped to overshadow another disappointing

jobs report. A report released from the National Association of Realtors showed a

better than expected increase in pending home sales in the month of March.

European markets finished mixed on Thursday, following the strong gains from the

previous two sessions. The weaker than expected sentiment result from the

Eurozone dragged the markets lower.

Meanwhile, Indian shares ended a lackluster trading session slightly lower on

Thursday, as traders rolled over the positions in the derivatives segment. Most

Asian markets edged higher on Thursday, as a rally on Wall Street overnight on

relief over the Fed's assessment of the U.S. economy and strong U.S. corporate

earnings.

Markets Today

The trend deciding level for the day is 17,136 / 5,195 levels. If NIFTY trades above

this level during the first half-an-hour of trade then we may witness a further rally

up to 17,188 – 17,245 / 5,210 – 5,231 levels. However, if NIFTY trades below

17,136 / 5,195 levels for the first half-an-hour of trade then it may correct up to

17,079 – 17,027 / 5,174 – 5,158 levels.

Indices S2 S1 PIVOT R1 R2SENSEX 17,027 17,079 17,136 17,188 17,245

NIFTY 5,158 5,174 5,195 5,210 5,231

News Analysis

4QFY2012 Result Reviews – Idea Cellular, MRF, Vesuvius India 4QFY2012 Result Previews – ICICI Bank, Axis Bank, Hexaware, HCCRefer detailed news analysis on the following page

Net Inflows (April 25, 2012)

` cr Purch Sales Net MTD YTD

FII 2,212 3,051 (839) (1,598) 43,728

MFs 448 558 (110) (525) (6,099)

FII Derivatives (April 26, 2012)

` cr Purch Sales Net Open Interest

Index Futures 4,016 4,365 (348) 9,125

Stock Futures 6,612 6,551 61 20,061

Gainers / Losers

Gainers Losers

Company Price (̀ ) chg (%) Company Price (` ) chg (%)

United Spir its 782 5.9 GMR Infra 27 (6.5)

Rajesh Exports 140 5.0 United Phos 113 (5.8)

Tata Comm 235 4.9 India Infoline 54 (5.2)

Punj Lloyd 54 4.0 Allahabad Bank 165 (5.1)

Idea Cellular 83 4.0 Canara Bank 439 (4.9)

Domestic Indices Chg (%) (Pts) (Close)

BSE Sensex (0.1) (20.6) 17,131

Nifty (0.3) (13.0) 5,189MID CAP (0.3) (19.2) 6,248

SMALL CAP (0.4) (27.5) 6,726

BSE HC (0.3) (20.2) 6,747

BSE PSU (0.6) (40.8) 7,160

BANKEX (0.4) (49.9) 11,666

AUTO (0.8) (88.7) 10,514

METAL 0.1 5.8 10,981

OIL & GAS (0.1) (4.6) 7,896

BSE IT 0.4 22.4 5,502

Global Indices Chg (%) (Pts) (Close)

Dow Jones 0.9 113.9 13,205

NASDAQ 0.7 21.0 3,051

FTSE 0.5 29.8 5,749

Nikkei 0.0 0.8 9,562

Hang Seng 0.8 163.4 20,810

Straits Times 0.2 6.9 2,988

Shanghai Com (0.1) (2.1) 2,405

Indian ADRs Chg (%) (Pts) (Close)

INFY 1.6 0.8 $46.9

WIT 0.0 0.0 $9.8

IBN 0.6 0.2 $32.5

HDB 0.1 0.0 $33.8

Advances / Declines BSE NSE

Advances 1,125 535

Declines 1,613 886

Unchanged 121 74

Volumes (̀ cr)

BSE 2,402

NSE 12,258



Market Outlook | India Research

April 27, 2012 2

Result Reviews

Idea (CMP: `83 / TP: - / Upside: -)

For 4QFY2012, Idea Cellular (Idea) reported healthy revenue growth; however,

the company disappointed marginally on the operating front.

Revenue came in at `5,370cr, up 6.7% qoq, on the back of 2.7% qoq growth in

MOU to 379min and subscriber growth of 5.9% qoq with end-of-period

subscriber base standing at 112.7mn. However, the company’s ARPM declined by

2.5% qoq to ` 0.42/min, which the company said is due to market place battle

and overcapacity. EBITDA margin decreased by 146bp qoq to 25.3% due to

higher license costs. PAT came in at ` 239cr, up 18.8% qoq, aided by ~ 20% qoq

lower interest costs. We remain Neutral on the stock.

Y/ E Sales OPM PAT EPS ROE P/ E P/ BV EV/ EBITDA EV/ Sales

March (̀ cr) (%) (̀ cr) (` ) (%) (x) (x) (x) (x)

FY2013E 23,002 26.6 1,077 3.3 7.1 25.5 2.0 6.2 1.6

FY2014E 25,921 26.9 1,502 4.5 9.2 18.3 1.8 5.2 1.4

Note: Estimates are subject to change post conference call

MRF – 2QSY2012 Review (CMP – ̀ 11,236, TP - `13,106, Upside: 17%)

For 2QSY2012, MRF reported top-line growth of 25.4% yoy to `2,993cr, slightly

higher than our estimate of `2,929cr. This was mainly driven by improvement in

exports and better replacement demand. The company’s EBITDA marginimproved by 160bp yoy to 10.9% in 2QSY2012 on the back of softening raw-

material prices, mainly rubber, which constitutes ~ 60% of the total raw-material

cost for the company. Profit for the quarter surged by 63% yoy to `150cr as

compared to `92cr in 2QSY2011. We expect MRF’s adjusted PAT to post a 42.4%

CAGR over SY2011-13E, driven by better demand and stabilizing rubber prices.

We maintain our Buy recommendation on the stock with a target price of

` 13,106, based on a target P/ E of 8.0x for SY2013E.


Sept (` cr) (%) (` cr) (` ) (%) (x) (x) (x) (x)

SY12E 12,390 11.1 11.1 1,468 16.5 7.7 1.6 5.2 0.6

SY13E 14,400 11.4 11.4 1,638 17.3 6.9 1.3 4.5 0.5

Vesuvius India – 1QCY2012 Review (CMP – ̀ 422, TP - , Upside -)

For 1QCY2012, VIL reported top-line growth of 15.8% yoy to `139cr, marginally

lower than our estimate of `142cr, however on a sequential basis, the revenue

declined by 6.1%. The company’s EBITDA margin dipped by 376bp yoy to 14.9%

in 1QCY2012 on the back of increased raw material prices. Profit remained flat

yoy at `12cr as compared to `13cr in 1QCY2011. The company has acquired 15

acres of land in Visakhapatnam for setting up its fifth plant. We expect

improvement in production volume due to the commencement of the newly

expanded Kolkata plant; however the demand outlook is not favourable.




April 27, 2012 3

Moreover, volatility in raw material prices is also a concern. Hence, we

recommend a Neutral on the stock.


Dec (̀ cr) (%) (̀ cr) (̀ ) (%) (x) (x) (x) (x)

CY12E 621 15.3 55 27 36.3 15.4 2.5 7.8 1.2

CY13E 714 15.9 68 34 42.2 12.6 2.1 6.2 1.0

Result Previews

ICICI Bank

ICICI Bank is slated to announce its 4QFY2012 results. We expect the bank to

report moderate net interest income growth of 13.3% yoy to `2,844cr.

Non-interest income growth is expected to be healthy at 23.8% yoy to `2,032cr.

Pre-provision profit of the bank is expected to rise by 22.5% yoy. Net profit is

expected to increase only by 18.3% yoy to ` 1,719cr on account of higher

provisioning expenses (expected to increase by 24.1% yoy) and higher tax outgo

(expected to increase by 34.1% yoy). At the CMP, the stock is trading at attractive

valuations of 1.4x FY2014E ABV (without adjusting value of subsidiaries).

We maintain our Buy view on the stock with a target price of `1,135.

Axis Bank

Axis Bank is slated to announce its 4QFY2012 results. We expect the bank to

report healthy NII growth of 32.4% yoy to `2,252cr. NIM, on a sequential basis,

is likely to remain flat with a downward bias. Non-interest income is expected to

increase by relatively moderate 9.4% yoy to `1,586cr. Pre-provision profit of the

bank is expected to register growth of 22.8% yoy. However, owing to higher

provisioning burden (an increase of 104.7% yoy), net profit is expected to

increase by relatively low 13.6% yoy to `1,159cr.

The stock is currently trading at attractive valuations of 1.5x FY2013E ABV – more

than 50% discount to HDFC Bank, despite similar earnings quality, profitability

and growth expectations over FY2013-14. Hence, we maintain our Buy

recommendation on the stock with a target price of ` 1,550.

Hexaware- 1QCY2012

Hexaware is slated to announce its 1QCY2012 results. We expect the company to

post revenue growth of 4.0% qoq to US$88mn, majorly led by volume growth.

In INR terms, revenue is expected to come in at `440cr, up 1.8% qoq. EBITDA

margin is expected to decline by 140bp qoq to 21.6% due to qoq INR

appreciation against USD. PAT is expected to come in at`

77cr. We maintain ourNeutral view on the stock.




April 27, 2012 4

HCC

For Hindustan Construction Company (HCC), we project a 15.0% yoy decline in

revenue for 4QFY2012 to `1,022cr due to slowdown in execution on account of

gloomy macro environment. On the EBITDA front, we expect a dip of 200bp yoy

to 11.8% on the back of muted margin performance in the past two quarters. On

the bottom-line front, we expect loss of `23.2cr in 4QFY2012 against profit of

` 22.6cr in 4QFY2011 due to poor show expected on the revenue and margin

front and owing to escalating interest cost, which is expected to post a yoy jump

of 24.8%. We continue to maintain our Neutral view on the stock.

Quarterly Bloomberg Brokers’ Consensus Estimates

Axis Bank - (27/ 04/ 2012)

Particulars (̀ cr) 4Q FY12E 4Q FY11 y-o-y (%) 3Q FY12 q-o-q (%)

Net profit 1,170 1,020 15 1,102 6

ICICI Bank - (27/ 04/ 2012)


Net profit 1,732 1,452 19 1,728 0

Jindal Steel & Power Ltd. - Consolidated (27/ 04/ 2012)


Net sales 4,859 3,848 26 4,355 12

EBITDA 1,953 1,727 13 1,742 12

EBITDA margin (%) 40.2 44.9 40.0

Net profit 1,130 1,002 13 996 13

Siemens India - (27/ 04/ 2012)Particulars (̀ cr) 2Q SY12E 2Q SY11 y-o-y (%) 1Q SY12 q-o-q (%)

Net sales 3,150 3,034 4 2,361 33

EBITDA 306 445 (31) 123 148

EBITDA margin (%) 9.7 14.7 5.2

Net profit 196 278 (30) 71 176




April 27, 2012 5

Maruti Suzuki - (28/ 04/ 2012)


Net sales 11,712 9,864 19 7,664 53

EBITDA 924 1,010 (8) 417 122 EBITDA margin (%) 7.9 10.2 5.4

Net profit 566 660 (14) 206 175

Exide Industries Ltd - (30/ 04/ 2012)


Net sales 1,353 1,226 10 1,250 8

EBITDA 209 222 (6) 166 26

EBITDA margin (%) 15.4 18.1 13.2

Net profit 135 163 (17) 104 30

Bank of India Ltd - (30/04/ 2012)


Net profit 700 494 42 716 (2)

United Phosphorous Ltd - Consolidated- (30/ 04/ 2012)


Net sales 1,915 1,805 6 1,872 2

EBITDA 348 317 10 348 (0)

EBITDA margin (%) 18.2 17.5 18.6

Net profit 164 217 (25) 112 45

Dabur India Ltd - Consolidated- (30/04/ 2012)


Net sales 1,345 1,116 21 1,453 (7)

EBITDA 224 188 19 232 (3)

EBITDA margin (%) 16.7 16.9 16.0

Net profit 161 147 10 173 (7)

Titan Industries Ltd - (30/ 04/ 2012)


Net sales 2,231 1,768 26 2,440 (9)

EBITDA 179 106 68 213 (16)

EBITDA margin (%) 8.0 6.0 8.7

Net profit 134 84 60 164 (18)




April 27, 2012 6

Hindustan Unilever Ltd - (01/ 05/ 2012)


Net sales 5,683 4,899 16 5,770 (2)

EBITDA 819 647 27 970 (16)EBITDA margin (%) 14.4 13.2 16.8

Net profit 653 569 15 754 (13)

Economic and Poli tical News

India to receive normal monsoon this year

Government mulls hike in MNREGA wages

IT waiver to private PF trusts may extend till March 2013

Corporate News

Government proposes a board for growth of auto sector

Government may reject Coal India's mininum penalty clause in FSA

ONGC wants Centre to offset additional cess on crude

United Phosphorous to move tribunal against CCI fine

Sesa Goa to begin exploration in Liberia mines this week

Mahindra to market SsanYong cars in South Africa

Rabobank sells 3.4% stake in Yes Bank for `453cr

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

Results Calendar

27/ 04/ 2012 ICICI Bank, Jindal Steel, Axis Bank, Siemens, Indiabul ls Fin., Hexaware, HCC

28/04/2012 Maruti

30/04/2012Titan Inds., Bank of India, Dabur India, Godrej Consumer, Exide Industries, Oriental Bank, United Phosphorus, Areva,Vijaya Bank, Punj Lloyd, KPIT Cummins, Automotive Axle, Taj GVK

01/05/2012 HUL

02/ 05/ 2012 Bharti Airtel, Hero Motocorp

03/ 05/ 2012 Marico, Aventis, KEC International, Finolex Cables

04/ 05/ 2012 Bank of Baroda, Corporation Bank, D B Corp, ITD Cementation




April 27, 2012 7

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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Market Outlook 27th April 2012

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