Indian stock market and companies daily report (May 08, 2012, Tuesday)

Indian markets are expected to open flat with a slightly negative bias. Most of the Asian markets are trading in the positive zone. However, SGX Nifty is trading marginally lower, down 0.1%.
U.S. markets showed a lack of direction during trading on Monday as traders expressed uncertainty about the situation in Europe following recent French presidential election results. The markets recovered from weakness seen in early trade but ended the day nearly flat. European markets remained cautious due to the uncertainty about the European debt crisis after the elections. The situation in Greece is currently seen as a greater risk than the outcome of French presidential election.
Meanwhile, Indian shares staged partial recovery from sharp previous-session losses, amid weak global trend in global markets, after Finance Minister Pranab Mukherjee postponed the enforcement of General Anti-Avoidance Rules (GAAR) by one year until fiscal 2013/14.

Markets Today
The trend deciding level for the day is 16,790 / 5,076 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,067 – 17,221 / 5,163 – 5,212 levels. However, if NIFTY trades below 16,790 / 5,076 levels for the first half-an-hour of trade then it may correct up to 16,636 – 16,360 / 5,027 – 4,939 levels.

Result Reviews
HDFC (CMP: Rs.664 / TP: - / Upside: -)
HDFC reported a healthy set of numbers with net profit growing by 16.1% yoy to Rs.1,326cr, which were above our estimates due to higher net interest income than expected by us. The loan growth was also strong at 20% yoy. The NIMs for the company rose on account of higher yield on advances and lower borrowing costs (most of the borrowings done at the fag end of quarter). The cost pressures of these borrowings however could be visible form 1QFY2012 onwards. The asset quality also remained stable with gross and net NPA levels remaining at similar levels on a yoy basis. We currently have a Neutral rating on the stock.
Bosch (CMP: Rs.8,873 / TP: Rs.9,317 / Upside: 5%)
Bosch (BOS) registered a healthy top-line growth of 10% yoy (12.5% qoq) to Rs.2,295cr, in-line with our expectation of Rs.2,086cr. Top-line growth was driven by 8.1% yoy growth in the auto segment and a strong 21.4% yoy growth in the nonauto segment. The auto segment performance was driven primarily by ~15% growth in the after-market segment. While diesel systems segment reported a ~8% yoy growth; gasoline systems segment registered a flat growth on account of slowdown in the passenger car industry (petrol variants). Exports too grew at a sluggish pace of ~3% and stood at Rs.250cr mainly on account of slowdown in Europe.
BOS recorded better-than-expected margins of 20.8%; an increase of 192bp yoy and 331bp qoq primarily due to decline in raw-material expenses. Raw-material expenses declined during the quarter led by cost savings due to localization benefits and strategic buying decisions carried out by the company. Thus, operating profit grew by 21.2% yoy (33.8% qoq) to Rs.478cr. As a result, net profit registered a strong 22.4% yoy (19.5% qoq) growth to Rs.336cr.
At Rs.8,873, the stock is trading at 19.5x and 19.1x CY2013E earnings, respectively. We recommend Accumulate rating on the stock with a target price of Rs.9,317 valuing it at 20x CY2013E earnings.
Glaxo Pharmaceuticals (CMP 2,126, TP- : Neutral)
Glaxo Pharmaceuticals reported lower-than-expected sales growth. The company’s net profit also came in below expectations. For the quarter, the company posted sales of Rs.622.8cr, registering 3.3% yoy growth. On the operating front, gross and operating margin came in at 57.9% and 31.4%, respectively, below our expectation of 61.1% and 34.3%, respectively. Consequently, net profit came in at Rs.122.9cr vs. our expectation of Rs.200.1cr. Currently, the stock is valued at 22.1x CY2013E earnings. We maintain our Neutral stance on the stock.
GSK Consumer (CMP: Rs.2,701/ TP: -/ Upside :-)
For 1QCY2012, GSK Consumer (GSKCHL) posted 14.5% yoy growth in its net sales to Rs.813cr, aided by 7% volume growth and an 8% price increase. The company’s flagship brands Horlicks and Boost posted volume growth of 9.4% and 2.1%, respectively. During the quarter, sales were, to an extent, affected by low orders from CSD (contributes around 8% to overall sales) during February and March, adjusting for which volume growth would be 9.5%. OPM fell by 57bp yoy to 19.9% due to higher costs of inputs such as barley and skimmed milk powder. The company’s bottom line rose by 19.3% yoy to Rs.132cr. We recommend a neutral on the stock.
South Indian Bank (CMP: Rs.23 / TP: - / Upside: - )
South Indian Bank reported its results for 4QFY2012. The bank reported 28.4% yoy growth in its NII to Rs.285cr, which was in line with our estimates. Non-interest income for the bank also increased by 37.8% on a yoy basis to Rs.83cr. However, operating expenses for the bank increased at much higher pace of 58.3% yoy (32.2% qoq), which capped the growth in pre-provisioning profits to 6.4% yoy. Net profit for the bank grew by 49.1% yoy to Rs.122cr, on back of decrease in provisioning expenses by 53.3% yoy. On the asset quality front, both gross and net NPA ratio increased marginally on a sequential basis by 3bp and 4bp, respectively and PCR declined by 382bp qoq to 71.4%. We maintain our Neutral recommendation on the stock.

Result Previews
Asian Paints
Asian Paints is set to declare its 4QFY2012 results. For the quarter, we expect Asian Paints to post 22.4% yoy growth in its consolidated top line to Rs.2,405cr, driven by volume growth and price hikes. The company’s OPM is expected to decline by 101bp yoy to 13.7%. The company’s bottom line is expected to register growth of 17.4% yoy to Rs.219cr. We maintain our Neutral view on the stock.
Hindalco
Hindalco is slated to report its 4QFY2012 results. We expect the company’s standalone net sales to decrease by 1.2% yoy to Rs.6,680cr. However, EBITDA margin is expected to contract by 165bp yoy to 11.9% on account of a decline in aluminium prices and rise in costs of key inputs (primarily coal). Net profit is expected to decrease by 27.1% yoy to Rs.516cr. We recommend a Buy rating on the stock with a target price of Rs.136.
Central Bank
Central Bank is scheduled to announce its 4QFY2012 results today. We expect the bank to report a Net Interest Income (NII) de-growth of 13.9% yoy to Rs.1,230cr. Non-interest income is also expected to decline by 24.9% yoy to Rs.393cr. However, operating expenses are expected to decline at much higher 38.9% yoy to Rs.990cr  (due to one-off staff related provisioning in 4QFY2011). Provisioning expenses are expected to increase by 55.7% yoy to Rs.477cr, and would lead to 4.0% yoy degrowth in net profit to Rs.127cr. At the CMP, the stock is trading at 0.8x FY2014E ABV. We maintain our Neutral recommendation on the stock.
CESC
CESC is expected to register 28.1% yoy growth in its standalone top line to Rs.1,081cr, aided by improved realization. During the quarter, CESC got the approval from WBERC for increasing the tariff for Kolkata region on an average by 13%. Post this order, the company would charge its customers at a higher rate with retrospective effect. The company’s OPM for the quarter is expected to expand by 385bp yoy to 33.0%. Net profit is expected to increase by 62.9% yoy to Rs.182cr. We maintain our Buy view on the stock with a target price of Rs.342.
Dena Bank
Dena Bank is scheduled to announce its 4QFY2012 results. We expect the bank to report reasonable growth of 4.4% qoq (21.0% yoy) in its net interest income to Rs.565cr. Non-interest income is also expected to show healthy traction by growing at 36.2% yoy (29.1% qoq) to Rs.173cr. Consequently, overall operating income is expected to grow at a healthy pace of 9.3% qoq. Operating expenses for the bank are expected to increase sequentially by 8.5% to Rs.306cr. While provisioning expenses are expected to decline by 24.9% qoq, a sharp increase of 58.4% qoq is expected in tax expenses, which would limit net profit growth for the bank at moderate levels of 11.7% to Rs.209cr. At the CMP, the stock is trading at 0.5x FY2014E ABV. We maintain our Buy recommendation on the stock with a target price of Rs.118.

Economic and Political News
- Government slashes capital gains tax for PE investors
- CEA requests Power Ministry to seek PMO help on fuel pact
- Government eases 30% sourcing condition for single brand retail

Corporate News
- Maruti operations unaffected by Suzuki’s recall of swifts
- Kingfisher to start paying January salaries: Mallya
- Ramky infra bags Rs.1,249cr orders

Online share trading in India, open demat account in Angel Broking Ltd.  for stock market India

Indian stock market and companies daily report (May 04, 2012, Friday)

The Indian markets are expected to open flat to negative tracking negative cues from global markets. Asian stocks fell for a second day as U.S. service industries expanded less than forecast.
The US markets closed lower yesterday amongst a mixed set of data releases. The stocks came under pressure following the release of a report from the Institute for Supply Management showing an unexpected slowdown in the pace of growth in the service sector in the month of April. The ISM said its non-manufacturing index dropped to 53.5 in April from 56.0 in March. The markets largely shrugged off the release of a Labor Department report showing a bigger than expected drop in initial jobless claims in the week ended April 28th, with traders looking ahead to the release of the monthly jobs report on Friday.
Indian shares fell for a second consecutive session on Thursday, with heavyweight auto, metal and banking shares pacing the declines. The rupee hit a fresh fourmonth low of 53.45 against the dollar, as overseas investors awaited more clarity on how the government will resolve tax policy issues like GAAR.

Markets Today
The trend deciding level for the day is 17,181 / 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 17,242 – 17,332 / 5,210 – 5,232 levels. However, if NIFTY trades below 17,181 / 5,195 levels for the first half-an-hour of trade then it may correct up to 17,091 – 17,030 / 5,174 – 5,159 levels.

RBI releases Basel–3 Guidelines
What the guidelines entail: Reserve Bank of India (RBI) released the final guidelines regarding the Basel-3 norms yesterday. Amongst other details, the key point is that the banks will have to achieve a minimum Core Equity Tier-I capital adequacy (CET1) of 5% by FY2014, which in a staggered manner will then have to be increased to 8% by FY2018.
Immediate impact: For 27 banks under our coverage (comprising 85% of the sector), as on FY2012 none of them are estimated to be below the immediate threshold of 5% of CET1 to be achieved by FY2014. However, in our view by FY2014, almost all banks will look to maintain a minimum CET1 of at least 8% to be comfortably above the minimum requirements.
Based on this, a handful of banks including primarily a few small PSU banks like Central Bank, Vijaya Bank and UCO Bank would be the only ones that would be below the 8% threshold. This is because, for most other banks post the government infusion already announced, they are likely to be above 8% CET1 from FY2013 itself. Few others such as Corporation Bank, IOB, IDBI and United Bank would also be marginally below 8%. SBI is likely to be the only large-cap that may end up below 8% (unless their risk-weighted asset growth lags total asset growth). In case of the smaller banks, since they are trading well below 1x P/ABV, capital raising would result in dilution in EPS of 4% to 18% and in book value to the extent of 2% to 5% of our current estimates. In case of SBI, dilution would be book-accretive but EPS-dilutive.
Medium-term impact: The immediate impact is restricted to few smaller banks (of which, in case of the three most exposed banks vis. Central Bank, Vijaya Bank and UCO bank we have a Neutral / Reduce rating). However, in the medium-term in our view the Basel 3 guidelines imply significant capital shortage for the Indian Banking system. By the end of FY2018, as the minimum CET1 requirement itself moves to 8%, we believe most of the banks would look to maintain closer to 9- 10% CET1 capital adequacy.
At the same time, if we factor in 17% asset growth for the sector between FY2014- 18E and assume that average ROEs for the sector improve by 100-200bps, then based on retained earnings alone, CET1 is estimated to decline to 7.9% from the current 9.1% estimated for FY2012. Even if on average, the sector is to maintain 9% CET1 this implies a capital shortage of about Rs.1.4lakh cr and at 10% CET1, a shortage of Rs2.6lakh cr. This amounts to 14% and 27% of the sector’s networth, respectively, or an additional equity requirement of 2.5%-4.5% every year for the next 6 years.
New Bank licenses: In our view, the issue of more new bank licenses than the earlier anticipated 3-4, including to some large corporates, with each of them looking to invest about Rs.5,000-10,000cr of equity capital, was one of the key risks on the horizon for the banking sector. However, in light of Basel 3 requirements, even if the RBI does give more new bank licenses, in our view in light of the capital shortage in the banking sector post Basel 3 requirements, over a 6 year period, this would still not amount to a supply glut. On the contrary, even after the Rs.30,000cr-40,000cr of fresh capital, there would still be significant capital shortage which would have to be met by the incumbents.
Positive implications of capital shortage: For the sector as a whole, in our view, even after factoring in new bank licenses, we expect intensity of balance sheet competition to be low especially from the PSU banks. As a result, we continue to have a positive outlook on overall margins and ROEs from a one-year + perspective (notwithstanding any short-term re-pricing and asset quality related volatility in margins).
The benefit of this will be especially enjoyed by those banks which already have high capital adequacy (main beneficiaries include ICICI Bank and HDFC Bank) or which can raise equity at high book-accretive premiums (such as Axis Bank and Yes Bank). In our view, these banks will stand to benefit from high margins/ROAs/ROEs as well as market share gains from a medium-term perspective. Of these, taking into account valuations as well, we reiterate Axis Bank, ICICI Bank and Yes Bank as our top picks.

Reliance Industries fined Rs.6,600cr for lower KG-D6 output
The Oil Ministry has imposed a penalty of ~ Rs.6,600cr (US$1.2bn) on Reliance Industries (RIL) for the steep fall in gas output from the KG-D6 block. Production from KG-D6 had gradually declined to 35mmscmd in 4QFY2012 from 51mmscmd in 4QFY2011. The penalty for lower production stood at US$457mn and US$778mn for FY2011 and FY2012, respectively. The Oil Ministry stated that RIL had violated the production sharing contract (PSC) and wilfully drilled fewer wells than what it had committed in its approved plan, Amended Initial Development Plan (AIDP). However, RIL had stated earlier that unexpected geology had resulted in decline in gas production. We await further clarity on this issue from RIL. Until then, we maintain our Buy rating on the stock with a target price of Rs.872.

IRB’s stock plunges 11% as Chairman is being investigated in murder case
As per media reports, IRB’s Chairman, Virendra Mhaiskar, is one of the 10 people identified by the Central Bureau of Investigation (CBI) of being potentially involved in the killing of Satish Shetty (RTI activist) in 2010. The outbreak of this news led to a decline in IRB’s stock by as much as 18%; however, the stock recovered and closed down by 11%.
As per the clarification given by the company to stock exchanges, the deceased RTI activist's brother had named various people, including Mr. Mhaiskar, as suspects. The Police Department had conducted an inquiry in the matter and given a clean chit to Mr. Mhaiskar. However, the deceased's brother was not happy with the investigation conducted by the department; and upon his petition, the state government had handed over the investigation to CBI. During the course of the investigation, CBI has, along with several other suspects, asked Mr. Mhaiskar and other two company officials to undergo a polygraph test.
Mr. Mhaiskar and the company’s officials have readily agreed to undergo the polygraph test since they are confident of their non-involvement in the matter. Fundamentally, we have a target price of Rs.228 for IRB. However, we believe that the stock could remain volatile until clarity emerges on this case. Thus, this event could remain an overhang on the stock in the near term.

Result Reviews
Marico
For 4QFY2012, Marico posted 22.9% yoy growth in its consolidated net sales to Rs.917cr, which was in-line with our estimates. Top-line growth was driven by volume growth across categories in the domestic business as well improvement in realizations. Marico’s international business also posted strong organic growth of 24% yoy. The company’s OPM stood at 12.3%, up 134bp on a yoy basis, aided by a decline in input costs. Net profit fell by 4% yoy to Rs.69.4cr as the company had exceptional gain of Rs.76cr in 4QFY11. We maintain our Neutral recommendation on the stock.
Aventis - (CMP Rs.2,138/TP: - /Upside: -)
Aventis reported a higher than expected sales growth, while the net profit came in below expectations. For the quarter, the company posted sales of Rs.323cr, a rise of 16.7% yoy. On the operating front, the Gross and Operating margins came in at 50.6% and 15.3% respectively. While the Gross margins were in line with expectations, the OPM’s came in higher than the expectations of 14.6%. However, in spite of the higher than expected improvement in the sales and OPM front, the net profit came in at Rs.40.1cr, V/s expectations of Rs.51.5cr, on account of higher than expected deprecations expenses during the quarter. Currently the stock is valued at 20.5xCY2013E earnings. We maintain a Neutral stance on the stock.
KEC International – (CMP: Rs.56/TP: Rs.73 /Upside: 31%)
KEC International (KEC) posted a strong set of numbers for 4QFY2012, exceeding our expectations. The company’s consolidated revenue grew strongly by 32.7% yoy to Rs.2,069cr (Rs.1,559cr), which was 8.8% higher than our estimate of Rs.1,902cr. Stellar growth was mainly due to strong execution in the international transmission business, delivering robust 68.7% yoy growth.
On the operating front, EBITDA margin saw a ~230bp yoy contraction to 8.2%, slightly better than our estimate of 8.0%. The company’s margin was primarily impacted by higher raw-material cost. Interest expense grew by 28.2% yoy to Rs.41cr on the back of higher interest rates. PAT declined by 5.3% yoy to Rs.74cr, 9.1% higher than our estimate of Rs.68.2cr and consensus estimate of Rs.62.9cr.
Order book at the end of the quarter stood at Rs.8,572cr, majorly aided by robust order inflows totaling Rs.1,800cr during the quarter. Strong order accretion since the past few quarters is mainly attributable to the company’s diversified business operations, with equal exposure to domestic and international markets.
At the CMP, the stock trades at cheap valuation of 4.6x FY2014E PE. Thus, we recommend Buy on the stock with a target price of Rs.73.
Automotive Axles (CMP: Rs.525/TP: - /Upside: -)
Automotive Axles (ATXL) reported modest 6.3% yoy (1% qoq) growth in net sales to Rs.296cr in 2QSY2012, which was in-line with growth in the medium and heavy commercial vehicle segment (up 5.5% yoy). EBITDA margin remained stable at 12.5% on stable commodity prices. As a result, EBITDA grew by 5.8% yoy to Rs.37cr. Led by higher other income (Rs.2cr as against Rs.0.1cr in 2QSY2011), net profit reported 4.6% yoy (down 2.5% qoq) growth to Rs.19cr. At Rs.525, we believe the stock is fairly valued at 9.3x its SY2013E earnings. We, therefore, maintain our Neutral rating on the stock.
Finolex Cables (CMP: Rs.34 / TP: Rs.60 / Upside: 78%)
Finolex Cables announced a strong set of numbers for 4QFY2012. The company’s net sales grew by 21.1% qoq and 12.1% yoy to Rs.605cr on the back of strong sales in the electrical segment. The electrical cables segment registered 39.5% qoq and 21.3% yoy growth in revenue to Rs.506cr. While the company’s other two segments – communication cables and copper rods division continued their poor run, witnessing a decline of 27.4% and 36.7% yoy in revenue, respectively. The company’s EBITDA increased by 45.9% yoy to Rs.58cr (Rs.40cr) on the back of higher revenue and margin expansion. EBITDA margin expanded by 223bp yoy and 136bp qoq to 9.6% on account of lower raw-material costs. Raw-material cost as a percentage of sales declined to 74.9% in 4QFY2012 compared to 80.2% in 4QFY2011. PAT increased by 139% yoy to Rs.45cr (Rs.19cr) on the back of margin expansion, lower forex loss, higher other income and tax adjustments. Other income increased by 130% yoy to Rs.9cr, while forex loss declined by 15.6% to Rs.10cr. Consequently, PAT margin increased by 391bp yoy to 7.4% (3.5%). We currently have a Buy recommendation on the stock. We may revise our estimates and target price post an interaction with management.

Result Previews
Bank of Baroda
Bank of Baroda is scheduled to announce its 4QFY2012 results. We expect the bank to report healthy net interest income growth of 7.3% yoy to Rs.2,804cr. Noninterest income is expected to grow higher by 14.7% yoy to Rs.957cr. While overall operating income growth is expected to come in at 9.1% yoy, a 12.1% yoy decline in operating expenses is expected to lead to an improvement in cost-to-income ratio to 35.1% from 43.6% in 4QFY2011. Provisioning expenses are expected to grow by 5.4% yoy, which coupled with expected tax expenses of Rs.521cr compared to Rs.61cr in 4QFY2011 would result in nearly flat yoy growth in net profit to Rs.1,297cr. At the CMP, the stock is trading at 1.1x FY2014E ABV. We maintain our Buy recommendation on the stock with a target price of Rs.943.
Corporation Bank
Corporation Bank is slated to announce its 4QFY2012 results. We expect net interest income of the bank to grow by healthy 17.8% yoy to Rs.897cr. Non-interest income is expected to decline by 3.3% yoy to Rs.474cr. While operating income is expected to grow by 9.6% yoy, operating expenses are expected to decline by 5.0% yoy to Rs.480cr, leading to healthy 19.4% growth in pre-provisioning profits to Rs.892cr. Provisioning expenses are expected to increase by 9.0% yoy. Net profit is expected to increase by 20.4% yoy to Rs.416cr. Currently, we have a Buy rating on the stock with a target price of Rs.508.
ITNL
We expect IL&FS Transportation Networks (ITNL) to post a weak set of numbers for the quarter on account of high base in 4QFY2011. The company’s revenue is expected to decline by 9.0% yoy to Rs.1,507cr. We expect the company to register  flat EBITDAM of 24.8%. Further, on the back of high interest cost, which is expected to come in at Rs.200cr, we expect ITNL’s earnings to decline by 30.1% yoy to Rs.111.3cr. We recommend Buy on the stock with a target price of Rs.265.

Economic and Political News
- Oil Ministry disallows US$1.4bn cost recovery by RIL from KG-D6
- Government to infuse Rs.30,000cr in Air India over nine years
- Mobile operators add 8mn users in March 2012
- Orissa government mulls cap on iron ore output

Corporate News
- Dr. Reddy's gets U.S. FDA nod for osteoporosis drug
- Cipla slashes cancer drug prices by up to 76%
- Bosch to invest Rs.300cr on capacity expansion
- Pantaloon raises Rs.200cr from Bennett Coleman

Online share trading in India, open demat account with Angel Broking Ltd. for stock market

Indian stock market and companies daily report (April 30, 2012, Monday)

The Indian markets are expected to open in green tracking positive cues from Asian markets.
Globally, U.S. stocks moved mostly higher over the course of the trading day on Friday due to some upbeat earnings news as well as a better than expected reading on consumer sentiment index which came in at 76.4 for April compared to the March’s reading of 76.2. The Commerce Department reported U.S. GDP numbers which increased by 2.2% (expected 2.5%) in the first quarter compared to the 3.0% growth seen in the fourth quarter CY2011. Most European stock markets also closed with weekly gains on Friday, after release of U.S. consumer spending data.
Meanwhile, Indian shares ended another lackluster trading session on as the news of Spain's credit rating and downgrade by S&P prompted investors to take a cautious stance.

Markets Today
The trend deciding level for the day is 17,133 / 5,189 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,244 – 17,353 / 5,224– 5,258 levels. However, if NIFTY trades below 17,133 / 5,189 levels for the first half-an-hour of trade then it may correct up to 17,024 – 16,913 / 5,156 – 5,121 levels.

Result Reviews
ICICI Bank (CMP: Rs.869 / TP: 1,183 / Upside: 36.1%)
ICICI bank delivered an all-round performance during 4QFY2012, both on the operating and asset quality front. The bank’s domestic NIM improved by 27bp qoq, leading to healthy sequential NII growth of 14.5%. The bank’s non-interest income also saw traction during the quarter growing by 17.8% qoq (up 35.8% yoy). The bank’s asset quality also improved during 4QFY2012 with both gross and net NPA levels declining by 2.5% qoq and 9.1% qoq, respectively. Healthy performances overall resulted in net profit for ICICI bank growing by a strong 31.0% yoy to Rs.1,902cr (up 10.0% qoq). We recommend a buy on the stock with a target price of Rs.1,183.
Axis Bank (CMP: Rs.1,121 / TP: 1,587 / Upside: 41.6%)
Axis bank reported a healthy PAT growth of 25.2% yoy (up 15.9% qoq) to Rs.1,277cr, which were ahead of our estimates. The bank’s NIMs declined sequentially on a qoq basis by 20bp, resulting in a lower operating profit than estimated by us. However, the bank surprised positively on the asset quality front with provisioning expenses declining by 67.0% qoq (down 45.2% yoy), resulting in a healthy bottom-line. Both gross and net NPA levels were down sequentially by 5.7% qoq and 30.8% qoq, respectively. We recommend a buy on the stock with a target price of Rs.1,587.
Maruti Suzuki (CMP: Rs.1,397 / TP: 1,510 / Upside: 8.1%)
For 4QFY2012, Maruti Suzuki (MSIL) reported an in-line opearting performance; whereas bottom-line was signifiacntly ahead led by steep increase in other income. Net sales for the quarter registered a strong growth of 17.2% yoy (51.7% qoq) to Rs.11,727cr aided by 4.9% yoy (50.4% qoq) increase in total volumes (led by new Swift and Dzire) and 11.7% yoy (1.4% qoq) increase in net average realisation (driven by superior product mix - higher contribution of diesel vehicles and price increases). On the operating front, EBITDA margins nosedived 281bp yoy to 7.3% largely on account of higher raw-material costs (up ~200bp yoy to 79.6% of sales) due to higher outgo relating to vendor compensation. Employee expenses too increased 66bp yoy impacted by higher variable pay during the quarter. As a result operating profit declined 15.3% yoy Rs.859cr. Net profit however, was down by only 3% yoy to Rs.640cr as substantial increase in other income (up 155% yoy) boosted the profitability.
At Rs.1,397, MSIL is trading at 18x and 13.9x FY2013E and FY2014E earnings, respectively. We maintain our Accumulate rating on the stock with a target price Rs.1,510.

HCC (CMP: Rs.20 / TP: - / Upside: -)
For 4QFY2012, HCC continued its poor performance on the numbers front as expected. On the top-line front, HCC’s revenue declined by 3.9% yoy to Rs.1,156cr against our estimate of Rs.1,022cr. However, it includes ~Rs.166cr (total arbitration award Rs.256cr) of arbitration award, excluding which it would have stood at ~Rs.990cr. EBITDAM came in at shocking 7.6%, a dip of 680bp yoy and lower than our estimate of 11.8%. On the earnings front, HCC reported a loss of Rs.54cr vs. profit of Rs.23cr in 4QFY2011, against our estimate of loss of Rs.23cr owing to lower EBITDA margin and higher interest cost. Interest cost witnessed an increase of 39.4% and 6.3% on yoy and qoq basis respectively. The total outstanding order book stands at Rs.15,336cr (excluding L1 orders of Rs.1,713cr) with dismal order inflow of Rs.1,889cr (decline of ~44% on yoy basis) for FY2012. Owing to concerns such as slowdown in order inflow, high debt and stretched working capital, we remain Neutral on the stock.
Hexaware (CMP: Rs.130 / TP: - / Upside: -)
For 1QCY2012, Hexaware reported a healthy set of results. Major highlights of the results were whopping 6.6% qoq volume growth even in a seasonally soft quarter for IT companies. The USD revenue came in at US$88mn, up 4.7% qoq. In INR terms, revenue came in at Rs.438cr, up 1.5% qoq. The company’s EBITDA and EBIT margins declined by 61bp and 77bp qoq to 22.4% and 20.8%, respectively, majorly due to qoq INR appreciation against USD. PAT for the quarter stood flat qoq to Rs.88cr. Hexaware has been outperforming in the mid-cap space since eight quarters by reporting a scorching 7.7% CQGR. Management has been outperforming its guidance every quarter and has maintained CY2012 yoy USD revenue growth guidance of at least 20%. We expect the company to continue its revenue growth on the back of increasing traction for enterprise services as well as continue its operational exuberance. We value the company at 12x CY2013E EPS of Rs.10.7, which gives us a target price of Rs.128. The stock price has run up significantly and we see limited upside from current levels. We maintain our Neutral rating on the stock.

Result Previews
Bank of India
Bank of India is scheduled to announce its 4QFY2012 results today. We expect the bank to report a decline of 6.5% yoy in net interest income to Rs.2,157cr. The noninterest income of bank is expected to report a moderate growth of 10.4% yoy to Rs.909cr. Operating expenses are expected to decline by 35.0% yoy to Rs.1,251cr (high base due to employee provisioning related to pension) expenses in 4QFY2011), leading to 50.6% yoy growth in PPP. Provisioning expenses are expected to rise by a substantial 76.2% yoy to Rs.842cr, however the net PAT is still expected to increase by a strong 42.6% yoy. We have a buy rating on the stock with a target price of Rs.392.
Dabur
Dabur is slated to announce its 4QFY2012 results. For the quarter, we expect Dabur to post a 17.4% growth in its consolidated Top-line to Rs.1,301cr, driven by both higher volumes and better realizations. The OPMs are expected to contract by 106bp yoy to 17.5% due to input cost pressures. The Bottom-line is expected to register a modest growth of 9.7% yoy to Rs.161cr. We recommend a Neutral on the stock.
Godrej Consumer
Godrej Consumer (GCPL) is slated to announce its 4QFY2012 results. For the quarter, we expect GCPL to post a strong 28.3% yoy growth in its Top-line to Rs.1,283cr, driven by healthy performance from both the domestic and international businesses. The OPMs are expected to remain flat at 17.5%. The Bottom-line is expected to register a growth of 13.0% yoy to Rs.160cr. We maintain a Neutral on the stock.
Exide Industries
Exide Industries (EXID) is slated to announce its 4QFY2012 results today. We expect the top-line to grow by 8% yoy (healthy growth of 6% qoq) to Rs.1,325cr led largely pick up in the OEM sales. On the operating front, EBITDA margin is expected to decline by 425bp yoy to 14.5% on account of price cuts carried out in September 2011 to counter competitive pressures. Hence, bottom line is expected to post a 20% yoy decline to Rs.130cr. The stock rating is under review.
Oriental Bank of Commerce
Oriental Bank of Commerce is scheduled to announce 4QFY2012 results today. The Net Interest Income is expected to grow by a healthy 16.8% yoy (muted 3.9% qoq) to Rs.1,184cr. Non-interest income is expected to increase by 15.8% yoy (17.6% qoq) to Rs.347cr. Operating expenses are expected to increase by 21.5% yoy (decline by 6.0% qoq) to Rs.571cr. While pre-provision profit is expected to increase by 13.8% yoy (16.0% qoq), Provisioning expenses are expected to decline by 39.0% yoy and 10.2% qoq. We expect the net profit of the bank to increase by 25.3% yoy (18.0% qoq) to Rs.418cr. At the CMP the stock is trading at 0.5x FY2014E P/ABV. We recommend Buy on the stock with a Target Price of Rs.296.
Vijaya Bank
Vijaya bank is scheduled to announce 4QFY2012 results. Net interest income is expected to grow at a muted 2.8% yoy (3.6% qoq) to Rs.492cr. Non-interest income is expected to decline by 3.0% yoy (increase by 19.8% qoq) to Rs.139cr. Consequently, the operating income is expected to increase by 1.5% yoy (6.8% qoq) to Rs.630cr. The operating expenses are expected to decline by 36.6% yoy to Rs.324cr on account of higher pension related provisioning in 4QFY2011. Reduction in operating expenses would aid pre-provisioning profit to grow by 178.3% yoy to Rs.306cr. Provisioning expenses are expected to increase by 55.2% yoy to Rs.133cr (decline by 20.4% qoq). Consequently, the net profit is expected to increase by 138.8% yoy (4.0% qoq) to Rs.129cr. At the CMP, the stock is trading at valuations of 0.7x FY2014E ABV. We recommend Neutral on the stock.
KPIT
KPIT Cummins Infosystems (KPIT) is slated to announce its 4QFY2012 results today. We expect the company to post revenue of US$95.8mn, up 30.4% aided by revenues coming in from Systime acquisition. In rupee terms, the revenue is expected to come in at Rs.481cr, up 27.0% qoq. EBITDA margin is expected to expand to remain almost flat qoq at 15.4% as Systime had EBITDA margin in single digits. PAT is expected to come in at Rs.38cr. We maintain Accumulate rating on the stock with a target price of Rs.98.

Economic and Political News
- EGoM given sweeping powers on 2G auction
- Business confidence improves but input costs a worry: CII
- NHAI lines up new road maintenance deals

Corporate News
- India Cements to invest Rs.750cr in Tamil Nadu unit expansion
- Reliance-RTL JV to launch entertainment channel Thrill
- Rajasthan scraps power project tenders won by BHEL-

Share market in India, open demat account with Angel Broking for online share trading

Indian stock market and companies daily report (April 27, 2012, Friday)

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.

Result Reviews
Idea (CMP: Rs.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 Rs.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 Rs.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 Rs.239cr, up 18.8% qoq, aided by ~20% qoq lower interest costs. We remain Neutral on the stock.

MRF – 2QSY2012 Review (CMP – Rs.11,236, TP - Rs.13,106, Upside: 17%)
For 2QSY2012, MRF reported top-line growth of 25.4% yoy to Rs.2,993cr, slightly higher than our estimate of Rs.2,929cr. This was mainly driven by improvement in exports and better replacement demand. The company’s EBITDA margin improved by 160bp yoy to 10.9% in 2QSY2012 on the back of softening rawmaterial prices, mainly rubber, which constitutes ~60% of the total raw-material cost for the company. Profit for the quarter surged by 63% yoy to Rs.150cr as compared to Rs.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 Rs.13,106, based on a target P/E of 8.0x for SY2013E.

Vesuvius India – 1QCY2012 Review (CMP – Rs.422, TP - , Upside -)
For 1QCY2012, VIL reported top-line growth of 15.8% yoy to Rs.139cr, marginally lower than our estimate of Rs.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 Rs.12cr as compared to Rs.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. Moreover, volatility in raw material prices is also a concern. Hence, we recommend a Neutral on the stock.

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 Rs.2,844cr. Non-interest income growth is expected to be healthy at 23.8% yoy to Rs.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 Rs.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 Rs.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 Rs.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 Rs.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 Rs.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 Rs.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 Rs.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 Rs.77cr. We maintain our Neutral view on the stock.
HCC
For Hindustan Construction Company (HCC), we project a 15.0% yoy decline in revenue for 4QFY2012 to Rs.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 Rs.23.2cr in 4QFY2012 against profit of Rs.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.

Economic and Political 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 Rs.453cr

Online share trading in India, open demat account with Angel Broking Ltd for share trading