Indian stock market and companies daily report (February 22, 2012, Wednesday)

Indian domestic markets are expected to open flattish tracking global markets worldwide. Asian stocks fell for a second day and oil retreated from a nine-month high as Greece’s approval for a second bailout failed to spur confidence among investors.

Euro-zone finance ministers early Tuesday gave a green light to a second rescue package for Greece, unlocking a €130bn in bailout money for the cash-strapped nation. The new bailout would leave Greece with sufficient funds to repay a €14.5bn bond due on March 20. The European markets finished Tuesday's trading with modest losses, while US markets managed to close marginally in the green as deal on the Greek debt bailout prompted some profit taking.

Meanwhile Indian shares continued to extend their recent gains driven by positive developments in the Euro zone area. Investors worldwide would keenly watch out for German PMI and US home sales data due for release today.

Markets Today

The trend deciding level for the day is 18,339/5,597 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,502 – 18,575/5,632 – 5,657 levels. However, if NIFTY trades below 18,339/5,597 levels for the first half-an-hour of trade then it may correct up to 18,325 – 18,221/5,572 – 5,537 levels.

IPO Note: MCX LTD. – Subscribe

Sustainable competitive position: Multi Commodity Exchange of India Ltd. (MCX) is a leading commodities exchange, which received permanent recognition from Government of India on September 26, 2003. The company reported a market share of 87.3% as of December 2011. MCX is also the fifth largest commodity futures exchange globally in terms of the number of contracts. As of June 2011, MCX was the largest silver exchange, the second largest gold, copper and natural gas exchange and the third largest crude oil exchange for this period globally.

Growth strategy in place: MCX has introduced a variety of new commodity futures contracts; and since inception, the number of products offered by the company has grown from 15 to 49 as of December 31, 2011. MCX has 2,153 members nationwide with over 296,000 terminals, including CTCL spread over 1,572 cities and towns in India. The company intends to continue to increase the number of participants by introducing new products on its exchange by expanding to more geographical areas, which is expected to drive growth going ahead. Regulatory changes can also lent a fillip to MCX as currently option contracts are not allowed to be traded in commodity. Any changes in favor of MCX can lead to a major increase in revenue and profitability going ahead.

Outlook and valuation: MCX currently has zero debt on its book, and major capex to fuel growth has already been incurred by the company. Secondly, the company reported investment and cash worth Rs.1,324cr at the end of 9MFY2012, which works out to Rs.260/share. On an annualized basis, shares will be trading at 15.1x and 18.1x at the lower and upper band on FY2012E earnings, respectively, which we believe is fair compared to global peers, which trade at 18x-19x TTM EPS, and the recent off market deals value MCX’s Indian peers NSE and BSE at 22x-24x 9MFY2012 annualized earnings. We believe MCX being the only major commodity exchange in India and the world’s fifth largest exchange can witness strong growth in revenue and profitability going ahead, which makes its valuation much more attractive than global and Indian peers. Hence, we recommend Subscribe to the issue on account of the relatively fair valuations.

ECL receives MOEF nod for its iron ore mine

Electrosteel Castings (ECL) has received forest stage-I clearance for its iron ore mines located at Kodolibad, West Singhbhum, Jharkhand, from Ministry of Forests and Environment (MOEF). ECL expects to receive stage-II clearance in the coming 2-3 months and then sign mining lease with the state government. After signing the mining lease, ECL can develop the mine and resume production. The mine has reserves of 91mn tonnes with 64% Fe content. ECL expects to commence production from this mine in FY2013. However, procedural delays cannot be ruled out in our view.

With upcoming production from coking coal and iron ore, ECL will turn into a fully integrated steelmaker. Although there is lack of clarity on the timelines for commencement of meaningful production from its coking coal and iron ore mines, ECL’s margins are expected to be significantly higher than its peers once it reaches optimum production capacity at its mines. Moreover, ECL’s associate, Electrosteel Steels (34.8% stake) with 2.2mn tonnes of steel capacity is expected to benefit the most, as ECL will supply coking coal and iron ore from its mines to Electrosteel Steels at subsidized rates (cost + 20%).

We have a positive stance on ECL’s initiatives of gradually venturing into steel making through its associate Electrosteel Steels. Furthermore, the company’s backward integration initiatives through allocation of coking coal and iron ore mines are expected to result in cost savings from FY2013. The stock is currently trading at 0.4x each for FY2012E and FY2013E. We recommend Buy on the stock with an SOTP target price of Rs.32.

Economic and Political News
- Economic slowdown likely to be temporary: Finance Minister
- India’s January consumer price inflation (CPI) at 7.65%
- RBI may consider CRR cut at next policy review meeting: Deputy Governor
- Government ready for dialogue with states on NCTC

Corporate News
- Coal India to incur additional Rs.6,500cr burden due to new labor pact
- Suzlon arm, REpower wins 250MW order from French firm
- Tata Motors to launch 230 Nano showrooms in one year
- M&M looks to assemble products in Russia through SsangYong distributors
- HCL Infosystems bags Rs.278cr order from Tamil Nadu government
- Kingfisher assures of normal operations in 5-7 days

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Indian stock market and companies daily report (February 21, 2012, Tuesday)

The domestic markets are expected to open flat or marginally in green following higher closing across most of the western markets. Asian stock markets are trading flat as investors remain cautions and wait for European finance ministers in Brussels to approve a crucial second bailout for Greece.

The US markets traded choppily on Friday (closed on Monday) as the economic data releases painted a mixed picture with a report from the Conference Board showing that its index of leading economic indicators increased for the fourth consecutive month in January, while another report from the Labor Department showing only a modest increase in consumer prices in the month of January. Although investors seemed reluctant to make any significant moves going into the long weekend, optimism that European finance ministers will approve a new bailout package for Greece helped to keep traders from doing much profit taking. Meanwhile Indian shares rebounded on Friday after some consolidation the day before, with firm global cues supporting the liquidity-driven rally.

Markets Today

The trend deciding level for the day is 18,315/5,572 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,397 – 18,504/5,599 – 5,634 levels. However, if NIFTY trades below 18,315/5,572 levels for the first half-an-hour of trade then it may correct up to 18,208 – 18,126/5,537 – 5,511 levels.

Cement companies raise prices

Cement companies have raised prices in the northern and western regions in the range of Rs.7 to Rs.10 per bag with effect from February 17, 2011. The price hike follows the correction in the region during January due to the severe winter season, which affected construction activities. We believe the recent price hike is an effort by cement manufacturers to pass on the hike in operating costs. We are currently Neutral on the cement sector, as we believe valuations are significantly ahead of the cycle, but we maintain our Buy recommendation on JK Lakshmi Cement due to its attractive valuations, with a target price of Rs.79.

NMDC cuts ore prices; lowers volume guidance

NMDC has cut prices of iron ore fines and lumps by 20% and 3%, respectively, for 4QFY2012 on the back of the decline in global iron prices, the recent rupee appreciation and increased export duty on iron ore. The price cut by NMDC is higher than our expectations given the shortage of iron ore in the domestic markets.

NMDC has also lowered its sales volume guidance for FY2012 and FY2013. The company now expects sales volumes of 27mn tonnes and 30mn tonnes (earlier 30 mn tonnes and 33mn tonnes) for FY2012 and FY2013, respectively. Although the company has ~5mn tonnes of iron ore inventory at its mine pit-heads, however it faces logistical constraints to increase off take due to breakdown in slurry pipeline, lower availability of railway rakes and stricter regulations in transportation of iron ore in Karnataka. Considering the company’s revised sales volumes guidance, we lower our 4QFY2012 and FY2013 realization and sales volume estimates.

Although NMDC has a strong balance sheet, presence in sellers market (iron ore), low cost of production, high-grade mines and long mine life, we now expect sales volumes to witness a CAGR of only 5.2% over FY2011-2013. On account of lower volume growth and lower realization, NMDC’s bottom line is expected to grow by only 4.0% yoy during FY2013. Further, given the 23% rise in the stock price since January 1, 2012, we recommend Neutral on the stock.

Result Review – 4QCY2011

CRISIL announced its 4QCY2011 numbers. Net sales increased by 26.6% yoy to Rs.225cr (Rs.177cr) led by strong growth in the research segment. Research segments revenue increased by 34.0% yoy while the rating segment and advisory segments revenue increased by 14.1% and 7.0% respectively. EBITDA increased by 15.2% yoy to Rs.80cr (Rs.69cr) due to higher revenue. EBITDA margin declined by 352bps yoy to 35.6% (39.1%). PAT increased by 10.4% yoy to Rs.56cr (Rs.51cr) while margin declined by 366bps yoy to 24.8% (28.5%) almost in line with EBITDA margin contraction. We will be coming out with a detailed report post management interaction. We continue to maintain an Neutral rating on the stock.

Economic and Political News
- Government may let foreign individuals directly buy corporate debt
- Railways stares at a Rs.2lakh cr crunch
- Bankers agree to subscribe to Air India’s Rs.7,400cr bond issue

Corporate News
- Ashok Leyland's Optare eyes small bus market
- Frozen bank accounts led to disruptions: Kingfisher
- Essar Oil plans to raise Rs.3,000cr in next 15 months

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Indian stock market and companies daily report (February 17, 2012, Friday)

The domestic markets are expected to open in green following positive opening across most of the Asian markets. The domestic bourses snapped three day rally yesterday and ended with modest losses as delays over Greece bailout added mild concerns for investors. Selling pressure remained subdued, however capped the downside for the markets.

Globally, European markets remained jittery in absence of resolution to the Greek sovereign debt crisis. Traders also digested the news of possible downgrade of 17 global financial institutions by Moody’s. US bourses ended on a positive note, thanks to upbeat U.S. job data which offset the negative sentiment generated over Greece’s bailout delay and Moody’s possible downgrade. The U.S labor department reported fall in initial jobless claims to 348,000 for week ended February 11th from the previous week's revised figure of 361,000.

On the domestic front, soothing of inflationary pressures and hopefulness of monetary easing has helped the markets to hold strong breadth. On the global front, positive economic data in US and China’s pledge to support the eurozone is expected to renew the sentiments in the markets. Markets will closely track the developments in the domestic as well as global markets.

Markets Today

The trend deciding level for the day is 18,127 / 5,512 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,210 – 18,266 / 5,541 – 5,560 levels. However, if NIFTY trades below 18,127 / 5,512 levels for the first half-an-hour of trade then it may correct up to 18,071 – 17,987 / 5,493 – 5,465 levels.

Spain’s borrowing costs climb, while yields drop for France

Spain sold EUR4.07bn (US$5.29bn) of debt maturing in 2015 and 2019. Average yield on the bills maturing October 2019 increased to 4.83%, compared to 4.54% when securities were last offered on January 19, 2012. Further, the average yield of notes maturing in July 2015 increased to 3.33%, from 2.86% at the previous auction on February 2, 2012. While a bond maturing in January 2015 was sold to yield 2.96%. After the sale, even the yield on Spain’s 10-year benchmark bond climbed 9 basis points to 5.53%, increasing the spread over German bunds by 13 basis points to 371 basis points. Spain’s rising borrowing costs indicate that investors’ concern towards solvency of the country’s US$807bn public debt has increased. Spain’s debt to GDP ratio at 74% is better than that of Greece (198%) and Portugal (111%), but the problem with the country’s economy is that unemployment (as a percentage of working population) at 21% is alarmingly the highest among eurozone countries. Further, the country’s economy has contracted by 0.3% qoq in the last three months of 2011, as per Madridbased National Statistics Institute. Government of Spain has a very tough task in hand, to strike a proper balance between austerity and growth measures so as to bring back the country’s economy out of this debt crisis.

France also sold a total of EUR8.45bn of notes maturing in 2014, 2015 and 2019. Average yields on two-year notes maturing in 2014 fell to 0.89% from 1.05% at a previous auction on January 19, 2012.

Both the sales came three days after Moody’s cut the ratings of six European nations, including Spain, and revised its credit outlook on France to ‘negative’.

RCom gets RBI nod for FCCBs redemption

RCom has received approval from the RBI to refinance redemption of its outstanding FCCBs worth US$1.2bn (~`5,825cr), the due date of which is March 1, 2012. The company said that RCom will benefit from extended loan maturity of seven years and attractive interest cost of ~5%. The refinancing is being funded by the Industrial and Commercial Bank of China (ICBC), China Development Bank (CDB) and Export Import Bank of China (EXIM). We maintain our Neutral view on the stock.

Economic and Political News
- Government hopes to achieve road project target for FY12
- Par panel to discuss report on DTC, may suggest hiking IT exemption limit
- EGoM okays 5% stake sale in ONGC

Corporate News
- Panel to take up Sasan coal diversion issue next week
- ONGC to expedite work on major oil, gas project in KG Basin
- ITC buys 4.62% in Hotel Leela from Russell Credit
- Magma Fincorp plans to start gold finance biz in H1 of FY13
- Supreme Court quashes Ansaldo venture bid For NTPC contract
- Promoters stake up to 48.53% in Reliance Infra after buyback

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Indian stock market and companies daily report (February 16, 2012, Thursday)

The domestic markets are expected to open sideways following flat opening across most of the Asian markets. The domestic bourses surpassed the psychological 18,000 mark yesterday, reaching the highest level in more than six months. The surge followed the strong rally across Asian markets driven by China’s pledge to invest in the euro zone bailout. Data showing sustained buying of Indian stocks by FIIs also boosted sentiments.

Global cues remained mixed. European markets edged up slightly as China signaled help amidst data that showed contraction of the Germany economy in the fourth quarter. Along with the positive remarks from Chinese officials, US traders also digested the news that the second bailout to Greece could be delayed and the US bourses displayed volatility ending slightly negative.

On the domestic front, optimism has gradually crept in. Soothing of inflationary pressures and hopefulness of monetary easing has led to broad based FII inflows. On the global front, China’s support to the eurozone is likely to renew the optimism of fixing the eurozone debt crises. Currently holding strong breadth, the markets will trace new catalysts for the rally to sustain.

Markets Today

The trend deciding level for the day is 18,145 / 5,512 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,289 – 18,376 / 5,563 – 5,593 levels. However, if NIFTY trades below 18,145 / 5,512 levels for the first half-an-hour of trade then it may correct up to 18,058 – 17,914 / 5,481 – 5,430 levels.

PM initiates action to address issues of coal supply for power projects

The Prime Minister has approved suggestions made by the Secretary level Committee for solving the issue of coal deficit faced by Power sector. As per the approved suggestions, Coal India Limited (CIL) will sign FSAs with power plants that have entered into long-term PPAs with power distribution companies and have been commissioned/would get commissioned on or before 31st March 2015. For power plants that have been commissioned up to 31st December 2011, FSAs will be signed before 31st March 2012. The FSAs will be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years with trigger level of 80% for levy of disincentive and 90% for levy of incentive. In case of any shortfall in fulfilling its commitment under the FSAs from its own production, Coal India Limited will arrange for supply of coal through imports or through arrangement with State/Central PSUs who have been allotted coal blocks.

In our view this news is positive for the power sector considering that the fuel shortage is the key issue currently faced by the sector. CIL had not signed any FSA’s with private power generators after March 2009. The main contention between CIL and Power companies was with regard to formers’ stance of having a trigger level of 50% beyond which it would not get penalized. However, we have concerns with regard to ability of Coal India to ramp up production. The company’s ability to ramp up production depends on quicker and easier approvals from environment ministry with regard to forest and environment clearance. We await more clarity on this development.

Result Review

INEOS ABS Ltd. - 4QCY2011

INEOS reported its 4QCY11 numbers. Top line for the quarter was flat at Rs.211cr yoy. Annual sales stood at Rs.826cr, 7.7% lower than our estimates of Rs.896cr. Operating margin for the quarter fell by 980 bps yoy from 16.4% to 6.4% mainly due to substantial increase in the raw material cost as percent of sales. Net profit stood at Rs.9.5cr, 56% lower yoy. Annual net profit came in at Rs.54cr, 22% lower than our estimates of Rs.69cr. As we roll over to CY2013E, we continue to maintain our Buy recommendation on the stock with the revised target price of Rs.733, based on PE of 15x for CY2013E.

Result Preview

GSK Pharma - 4QCY2011

Glaxo Pharma is slated to announce its 4QCY2011 numbers. For the quarter, we expect the company to post healthy top-line growth of 17.5% yoy to Rs.577cr. The company’s bottom line is expected to register a decline of 20.5% yoy to Rs.116cr, aided by margin contraction of 350bp yoy to 30.6%. We maintain our Neutral view on the stock.

Economic and Political News
- India set to harvest record 250mn tonnes of Food grains
- Finance Minister asks states to promote investment in farm supply chain
- CII asks for continuation of 10% standard rate of excise duty in its pre-budget memo

Corporate News
- Future licences won't be linked to spectrum allocation: Sibal
- Government mulls options to allocate NTPC’s stake in ICVL
- Volvo rolls out three new variants at lower price points
- Akzo Nobel India board agrees to partial rollback of royalty rate to parent
- Sterlite Industries to pay US-based Asarco US $82.8mn in damages

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Indian stock market and companies daily report (February 15, 2012, Wednesday)

The domestic markets are expected to edge higher following positive opening across most of the Asian markets. Domestic equities ended with modest gains after WPI inflation dipped to 6.6% in January, its lowest level in more than two years. Global cues turned weak. European markets marginally declined following Moody's continual pessimism over the euro zone. Continuing its negative stance, Moody’s downgraded six eurozone nations. In addition, traders became increasingly cautious about the hurdles to a resolution to the Greek debt crisis. Amid concerns in Europe, US bourses displayed similar weakness and ended on a flat note.

On the domestic front, investor sentiment has firmed up considerably. Core inflation (non-food manufacturing) has declined for the second consecutive month, suggesting a strong case for monetary easing. Amid positive developments, the markets may hold strong breadth for some more time. Nonetheless, it will be watchful from here in that markets wait for the economy to indicate recovery that equities have partly factored in. The markets will closely track the pace of policy reforms. In addition, developments across the Eurozone will also offer directions to the markets.

Markets Today

The trend deciding level for the day is 17,827 / 5,407 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,912 – 17,975 / 5,437 – 5,457 levels. However, if NIFTY trades below 17,827 / 5,407 levels for the first half-an-hour of trade then it may correct up to 17,764 – 17,679 / 5,387 – 5,357 levels.

WPI inflation eases to 26 month low of 6.6%; manufacturing inflation also comes down on expected lines

Wholesale price-based inflation for January 2012 eased to 6.6% yoy, falling from 7.5% yoy levels registered in December, 2011. Inflation levels of November 2011 were revised upwards from 9.1% to 9.5%. January2012 inflation levels of 6.6% yoy were slightly above Bloomberg estimate of 6.7%. Core (non-food manufacturing) inflation – which the RBI tracks closely – came in at 6.5% yoy as against 7.5% in December 2011.

Primary articles inflation came in at a low 2.3% yoy, ~82bp lower than the 3.1% yoy witnessed in December 2011 (a significant decline of 665bp over 8.2% yoy registered in November 2011). Food articles inflation fell into the negative territory (negative 0.5% yoy compared to 0.7% yoy in December, 2011 and 8.3% yoy in November, 2011) for the first time since the inception of the new base year (2004-05). Non-food articles inflation, which was as high as 18.2% yoy in August 2011, declined to 0.6% yoy (1.5% yoy in December 2011). However, over December 2011, non-food articles index rose by 2.4% mom (annualized growth of 28.2%) on account of higher prices of gaur seed, flowers, logs and timber, soyabean and groundnut seed and linseed amongst others. Inflation for minerals rose at a faster pace of 24.8% yoy compared to 21.9% yoy in December 2011.

Fuel and power inflation continued to be high at 14.2% yoy (average of 14% over the past six months), though which can be partly attributed to the sharp rupee depreciation. Within fuel and power, while both coal and mineral oil registered growth of 0.1% and 0.2%, respectively, electricity index remained unchanged.

Manufactured products, which have a weightage of ~65% in the overall WPI inflation, eased to 6.5% yoy from 7.4% yoy levels in December 2011 (average of 6.4% over the past two years). The mom growth in manufacturing index was reasonably high at 0.4%, leading to annualized growth of 5.1%. Manufacturing articles inflation was driven by higher prices of groundnut oil, gur, and mustard and rape seed oils. On the other hand, inflation in processed prawn, sugar and tea dust (blended) moderated vis-à-vis December 2011.

The spread between primary articles and manufactured products inflation, which was as high as 13.1% at the start of CY2011, remained in the negative territory (negative 4.2%) for the second consecutive month.

Consequent to the monetary tightening over the past one year, WPI figures, led by a substantial drop in food inflation, are at a 26-month low of 6.6% yoy (as of January 2012). Manufacturing products inflation, which had remained stiff at 7.4% yoy in December 2011, eased along expected lines to 6.5% yoy for January 2012. With manufacturing inflation coming in higher than the primary inflation for the second consecutive month, after a long spell of lagging it, in our view likely indicates that a large part of pass-through of primary inflation is already done with. Hence, in-line with food inflation, we expect manufacturing inflation to cool off further in the coming few months. If there is a consistent decline in overall WPI, including manufacturing inflation on these lines, in our view the RBI would then consider more decisive signaling through repo rate cuts as well (unlike just the CRR cut in the last monetary policy), possibly from April 2012.

3QFY2012 - Result Reviews

Tata Motors

On a consolidated basis, Tata Motors (TTMT) reported and impressive 44% yoy (25% qoq) growth in top-line to Rs.45,260cr aided by 42% yoy (29% qoq) growth in JLR revenues. JLR performance was driven by 36.7% yoy (26.9% qoq) increase in volumes and 4% yoy increase in net average realization. Volume performance at JLR continues to be driven by significant growth in China and Russia, where volumes grew by 81% and 34% yoy, respectively. Operating margins surprised positively as it expanded by 81bp yoy (264bp qoq) to 15.1%. Margin expansion was led by JLR, while India business continued to be under pressure. JLR EBITDA was up 38% yoy (50% qoq) to GBP682mn, with EBITDA margin at 18.2% (up 260bp), led by strong volume performance (Evoque, Jaguar XF 2.2), favourable forex and richer geography mix. Standalone EBITDA margin remained weak at 6.4%, down 380bp yoy (40bp qoq) on commodity inflation, higher discounting and marketing spends in PV business. Consolidated net profit surged 40.5% yoy (81.4% qoq) to Rs.3,406cr. The stock rating is currently under review. We shall revise our estimates and release a detailed result note soon.

Jaiprakash Associates

For 3QFY2012, Jaiprakash Associates (JAL) reported in-line performance on the revenue front but better-than-expected numbers on the EBITDAM and PAT level. On the top-line front, the company’s revenue increased by 12.1% on a yoy basis to Rs.3,305cr, which was exactly as per our estimate. The cement segment reported growth of 37.2% yoy; however, construction and real estate revenue declined by 1.7% and 27.6%, respectively, on a yoy basis. Blended EBITDA margin came in at 24.7%, down 400bp yoy and ahead of our expectation of 21.2%. The construction and real estate segments, with margins of 29.8% and 47.9%, respectively, led to good show on the margin front. Interest cost stood at Rs.448.5cr, up 32.6% yoy 10.8% qoq and marginally higher than our estimate of Rs.425.1cr. Depreciation cost came in at Rs.202.2cr, up 31.1% yoy and 14.8% qoq and higher than our estimate of Rs.184.9cr. The bottom line came in at Rs.205.0cr, a decline of 11.9% yoy and higher than our estimate of Rs.69.5cr due to high other income. Other income during the quarter jumped from Rs.3.0cr in 3QFY2011 to Rs.120.1cr in 3QFY2012, resulting in better-than-expected earnings performance. We maintain our Accumulate rating on the stock with an SOTP target price of Rs.88.

HDIL

HDIL announced its 3QFY2012 numbers. The company’s net sales declined by 8.8% yoy to Rs.423cr (Rs.463cr). EBITDA declined by 43.4% yoy to Rs.157cr (Rs.278cr), largely due to a decline in revenue and margin compression. EBITDA margin declined by 1,998bp yoy to 37.2% (59.9%), mainly due to increased cost of construction, up 24.2% of net sales in 3QFY2012 vs. 18.3% of net sales in 3QFY2011 and project interest, which increased to 33.4% of net sales in 3QFY2012 vs. 25.0% of net sales in 3QFY2011. Adjusted PAT declined by 31.7% yoy to Rs.156cr (Rs.228cr), while margin declined by 1,238bp yoy to 36.9% (49.2%). We will be coming out with a detailed report post management interaction. We currently have a Buy rating on the stock with a target price of Rs.115.

IVRCL

IVRCL reported a disappointing set of numbers for 3QFY2012, with lower-thanexpected performance on all fronts. The company’s revenue declined by 15.1% yoy to Rs.1,203cr and was below our estimate of Rs.1,374cr. On the EBITDA margin front, the company posted dismal margin of 7.9%, a dip of 200bp yoy against and below our estimate of 9.2%. Interest cost came in at Rs.66.1cr, an increase of 11.6% yoy/1.3% qoq. On the earnings front, IVRCL reported an 84.0% yoy decline to Rs.6.8cr, against our estimate of a 46.5% decline. This was on account of poor performance on the revenue and margin front and interest cost burden. We would come out with a detailed note post the conference call. Currently, the target price and rating are under review.

Simplex Infra

For 3QFY2012, Simplex Infra’s (Simplex) numbers came above our and street expectations on revenue and earnings front and marginally lower at EBITDAM level. On the top-line front, Simplex reported robust growth of 36.7% yoy to Rs.1,594cr, higher than our estimate of Rs.1,348cr (consensus Rs.1,145cr). EBITDAM dipped by 120bp yoy to 8.0% for the quarter, marginally lower than our estimate of 8.6%. Interest cost came at Rs.55.0cr a yoy/qoq jump of 52.0%/7.6% and in line with our estimate of Rs.54.3cr. PAT declined by 22.3% yoy to Rs.18.0cr, above our estimate of Rs.13.6cr (consensus Rs.14.9cr). Better-than-expected bottom-line performance was due to robust revenue growth. At the end of the quarter, the company’s order book stood at Rs.14,442cr (2.9x FY2011 revenue). Simplex had order inflow of Rs.1,018cr for the quarter. We maintain a Buy on the stock, with a Target Price of Rs.233.

Graphite India

Graphite India Limited (GIL) announced its 3QFY2012 numbers. The company’s net sales increased by 29.2% yoy to Rs.436cr (Rs.337cr). The graphite segment, which contributed around 85.6% to the total revenue, registered strong growth of 27.1% yoy to Rs.373cr (Rs.294cr), while the steel segment managed a 15.8% yoy increase to Rs.30cr (Rs.26cr). EBITDA increased by 21.1% yoy to Rs.89cr (Rs.73cr), largely due to higher revenue. EBITDA margin declined by 137bp yoy to 20.3% (21.7%), mainly due to higher raw-material cost, which increased to 42.6% of net sales in 3QFY2012 vs. 40.2% of net sales in 3QFY2011. PAT increased by 27.1% yoy to Rs.56cr (Rs.44cr). Despite a 137bp OPM contraction, PAT margin only declined by 21bp yoy to 12.9% (9.1%) due to lower tax provision and higher other income. Tax rate declined to 32.1% of PBT in 3QFY2012 vs. 33.2% of PBT in 3QFY2011, while other income increased by 96.8% to Rs.7cr in 3QFY2012 vs. Rs.4cr in 3QFY2011.We will be coming out with a detailed report post management interaction. We continue to maintain our Buy view on the stock with a target price of Rs.102.

Economic and Political News
- Oil Minister rules out deregulation of diesel prices
- GoM to decide today on stake sale of ONGC, BHEL
- TRAI for 74% cap on foreign holding in telecom towers
- Government set to slash further subsidy on non urea fertilizers like DAP and
MOP for FY13

Corporate News
- Nasscom pegs 11-14% growth in Infotech, ITeS exports in FY13
- RIL's KG-D6 output may fall to 27 mmscmd next fiscal
- Bihar government approves Ultratech's proposal for grinding unit
- BSES gets Rs.5,000cr IDBI Bank loan to pay dues
- Orissa halts operations at SAIL iron ore mine
- Tata Power to invest US $125mn in Indonesian project
- Lanco to raise US $750mn for power biz

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