Market Outlook
August 4, 2015
Dealer’s Diary
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
0.3
73
28,187
Indian markets are expected to open in red tracking SGX Nifty.
Nifty
0.1
10
8,543
U.S. stocks closed lower on Monday, as investors weighed mostly on the lackluster
MID CAP
0.5
58
11,331
ISM manufacturing data and renewed decline in the oil. Notably, Apple & Twitter
SMALL CAP
0.9
110
11,941
stocks fell 2.4% and 5.6%, respectively.
BSE HC
0.3
56
17,104
U.K. stocks edged lower Monday, hurt by selloff in mining stocks, after data showed
BSE PSU
0.5
39
7,758
decline in the factory activity at China, a key market for the group.
BANKEX
1.0
212
21,712
AUTO
0.7
139
19,247
Markets closed higher for fourth consecutive session on Monday, aided by ICICI
METAL
(1.0)
(94)
8,575
Bank, SBI and ITC. Broader markets outperformed benchmarks with BSE Midcap
OIL & GAS
(0.5)
(50)
9,852
and Smallcap indices rising 0.5% and 0.9%, respectively.
BSE IT
(0.5)
(59)
11,014
News & Result Analysis
Global Indices
Chg (%)
(Pts)
(Close)
Result Review: Hero, HCL Tech, Styrolution ABS, Nilkamal
Dow Jones
(0.5)
(92)
17,598
Refer detailed news & result analysis on the following page
NASDAQ
(0.3)
(13)
5,115
Markets Today
FTSE
(0.1)
(8)
6,689
The trend deciding level for the day is 28,174 / 8,538 levels. If NIFTY trades above
Nikkei
(0.2)
(37)
20,548
this level during the first half-an-hour of trade then we may witness a further rally up
Hang Sang
(0.9)
(225)
24,411
to 28,276 - 28,366 / 8,569 - 8,594 levels. However, if NIFTY trades below
Straits Times
(0.3)
(10)
3,193
28,174 / 8,538 levels for the first half-an-hour of trade then it may correct towards
Shanghai Com
(1.1)
(41)
3,623
28,085 - 27,982 / 8,513 - 8,483 levels.
Indian ADR
Chg (%)
(Pts)
(Close)
Indices
S2
S1
PIVOT
R1
R2
SENSEX
27,982
28,085
28,174
28,276
28,366
INFY
0.3
0.1
$17.0
NIFTY
8,483
8,513
8,538
8,569
8,594
WIT
(0.1)
(0.7)
$12.3
IBN
3.1
0.3
$10.4
Net Inflows (July 31, 2015)
HDB
0.8
0.5
$63.0
` cr
Purch
Sales
Net
MTD
YTD
FII
5,594
5,819
(225)
5,589
140,970
Advances / Declines
BSE
NSE
MFs
2,279
1,924
356
4,339
57,948
Advances
1,805
927
Declines
1,117
511
FII Derivatives (August 3, 2015)
Unchanged
111
124
` cr
Purch
Sales
Net
Open Interest
Index Futures
933
1,121
(188)
14,735
Volumes (` cr)
Stock Futures
3,270
2,808
463
49,109
BSE
3,728
NSE
19,171
Gainers / Losers
Gainer
Loser
Company
Price (`)
chg (%)
Company
Price (`)
chg (%)
JPASSOCIAT
11
18.3
HCLTECH
937
(5.9)
SUZLON
24
11.6
GPPL
223
(5.3)
SUNTV
374
11.2
FSL
33
(5.3)
ALOKTEXT
7
10.6
KAILASH
6
(4.9)
RAJESHEXPO
567
9.1
JINDALSTEEL
76
(3.5)
www.angelbroking.com
Market Outlook
August 4, 2015
Result Review
Hero Motocorp Ltd (CMP: `2,698/ TP: /Upside:)
Hero Motocorp 1QFY2016 results were ahead of our estimates. Revenues declined
marginally 1% yoy to `6,955cr in line with our expectations of `7,095cr. Volumes
declined 4% yoy due to weak rural sentiments. Realisation/vehicle grew 3% yoy to
`42,267/unit due to price hikes. Hero’s operating margins at 15.1% improved
160 bp yoy and were ahead of our estimates of 13%. During the quarter, raw
material costs were lower on account of subdued commodity prices coupled with
raw material cost reduction measures under the programme “Leap”. Also
reduction in marketing expenses due to seasonality further aided in margin
improvement. Given the strong operating performance, Net profit at `750cr grew
33% yoy, beating our expectations of `679cr. We currently have Neutral rating on
the stock and would review estimates post management interaction.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
30,053
12.8
2,821
141.3
36.1
19.1
6.9
12.7
1.6
FY2017E
34,565
13.4
3,297
165.1
35.9
16.3
5.9
10.3
1.4
HCL Tech (CMP: `937/ TP: `1,100/Upside: 17.4%)
HCL Tech posted results better than expected on the top-line, while the OPM came
below expectations, and net profit just in line with expectations. HCL Tech posted a
growth of
3.2% qoq in USD revenues to US$1,538mn in 4QFY2015 V/s
US$1,535mn expected V/s US$1491mn in 3QFY2015. On constant Currency
terms (CC) the company posted a 2.9% qoq growth during the period. In rupee
terms, the revenues came in at `9,777cr V/s `9,724cr expected and V/s `9,267cr
in 3QFY2015, a qoq growth of 5.5%.
In terms of geography, the US (57.5% of sales) posted a robust CC growth of 5.1%
qoq and Europe (31.4% of sales) was CC growth of 0.1% qoq, while ROW (11.2%
of sales) posted a 0.1% qoq CC dip in the revenue. In terms of Verticals, the
financial services (26.0% of sales), posted qoq CC growth of 2.1%. The best
performing verticals during the quarter were Life sciences & Healthcare (12.0% of
sales), Retail & CPG (8.8% of sales) and Telecommunications, Media, Publishing &
Entertainment (9.5% of sales) which posted CC qoq growth of 10.2%, 7.1% and
9.6% qoq respectively. In terms, of services, Infrastructure Services and Business
Services posted a CC qoq growth of 5.2% and 4.0% respectively.
On the operating front the EBDITA margins came in at 21.5% V/s 22.8% expected
and V/s 22.6% in 3QFY2015, a qoq dip of 108bps. EBIT, on the other hand,
came in around 20.2% V/s 21.3% in 3QFY2015, registering a dip of 113bp. The
margins came under pressure, on back of wage hikes during the quarter. The
utilization rate moved up to 83.5% V/s 81.9% in 3QFY2015, while attrition rate
was 16.5% V/s 16.2% in 3QFY2015. The PAT, came in at `1,783cr V/s `1,782cr
expected and `1,624cr in 3QFY2015 a qoq growth of 5.9%. PAT came in line with
expectations in spite of the EBDITA contraction, more than expected, on back of
higher than expected other income. Other income came in at
`212cr in
4QFY2015 V/s `179cr in 3QFY2015.
www.angelbroking.com
Market Outlook
August 4, 2015
On client additions, the company added 1 client in USD 100mn+ category, 5
Clients in USD 40mn+ category being driven by increased momentum in large
deal signings in ITO and Engineering and R&D Services. It added 10 clients in
USD 10 mn+ category, 24 clients in USD 5 mn+ category and 47 clients in USD
1mn+ category reflective of our increased participation in engagements in
digitalization and modern apps.
Overall, HCL Tech has signed 58 transformational engagements during the
FY2014-15 with US$5bn+ of Total Contract Value. These Bookings saw significant
momentum driven by Next-gen ITO, Engineering Services Outsourcing, Digital and
Modern Apps deals, each of which had a component of new technology constructs
like Digitalization, Cloud etc. These engagements reflected a broad-based spread
across verticals, service lines and geographies. We maintain our accumulate rating
on the stock with a target price of `1,100.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
41,535
24.0
7,991
56.6
20.8
17.6
3.7
10.0
2.4
FY2017E
46,519
23.4
8,626
61.1
17.7
16.3
2.9
8.3
1.9
Styrolution ABS (CMP: `779/ TP: / Upside -)
Styrolution ABS (Styrolution) reported muted set of numbers for 1QFY2016. Top
line for the quarter declined by 1.6% yoy to `314cr, which is lower than our
estimates of`347cr. EBITDA grew by 128.2% on yoy basis and came in at `34cr.
The EBIDTA margins improved by 614bp yoy to 10.8%. This was on account of
lower raw material cost which declined by 970bp yoy to 69.2% of sales. However,
part of it was offset by 300bp yoy increase in other expense to 16.7% of sales. We
had built in EBITDA margin estimate of 11.7%. As a result, the net profit increased
by 246.7% yoy to `18cr. At current market price, the stock is trading at 19.2x its
FY2017E earnings. We have a Neutral view on the stock.
Y/E
Sales OPM PAT
EPS
ROE
P/E
P/BV EV/Sales EV/EBITDA
Mar
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
1,271
8.6
56
31.6
10.5
24.6
2.5
1.0
12.1
FY2017E
1,440
9.2
71
40.6
12.3
19.2
2.2
0.9
9.8
Nilkamal (CMP: `921/ TP: `1,005/ Upside: 9.1%)
For 1QFY2016, Nilkamal reported a good set of numbers. The standalone top-
line for the quarter witnessed 9.6% yoy increase to `458cr, which is in-line with our
estimate of `455cr. The company benefitted from lower raw material prices for the
quarter as the polymer prices witnessed c.8% decline on yoy basis. Raw material
cost as a percentage of sales declined by 590bp yoy to 58.8% of sales. Employee
expense and other expenses increased by 25bp yoy and 110bp yoy to 6.8% of
sales and 23.0% of sales respectively. As a result, the EBITDA margin expanded by
455bp yoy to 11.3%, against our estimate of 10.0%.
The company has reduced its debt over the past year, which seems to be paying
off as interest expense has declined to `5cr against `8cr in 1QFY2015. Aided by
better operating performance, lower interest outgo and higher other income, the
net profit grew by an impressive 362.8% yoy to `25cr.
www.angelbroking.com
Market Outlook
August 4, 2015
As far as segmental performance is concerned, the plastics division witnessed 9.0%
yoy growth to `402cr and the margins for the segment improved by 546bp yoy to
11.7%. The lifestyle segments’ revenues grew by 21.0% yoy to `50cr but the
segment reported a loss of `2cr. Others, which is includes the mattress business,
saw revenue decline of 11.0% on yoy basis to `8cr while the segment reported loss
of `0.1cr.
At current market price, the stock is trading at 13.7x its FY2017E earnings. We
have an Accumulate rating on the stock with a revised target price of `1,005
based on a target P/E of 15.0x for FY2017E.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
Mar
(` cr)
(%)
(` cr)
(`)
(%) (x)
(x)
(x)
(x)
FY2016E
1,948
10.6
90
60.0 16.8 15.4
2.4
7.1
0.8
FY2017E
2,147
10.3
100
67.0 16.1 13.7
2.1
6.3
0.7
Quarterly Bloomberg Brokers Consensus Estimate
Tata Chemicals Ltd (Consol)- August 05, 2015
Particulars (` cr)
1QFY16E
1QFY15
y-o-y (%)
4QFY15
q-o-q (%)
Net sales
4,118
3,803
8.3
3,658
12.6
EBITDA
564
504
12.0
411
37.1
EBITDA margin (%)
13.7
13.2
11.2
Net profit
222
176
26.3
(74)
0.0
Siemens Ltd- August 05, 2015
Particulars (` cr)
1QFY16E
1QFY15
y-o-y (%)
4QFY15
q-o-q (%)
Net sales
2,438
2,319
5.1
2,589
(5.8)
EBITDA
225
53
325.7
250
(10.1)
EBITDA margin (%)
9.2
2.3
9.7
Net profit
127
13
878.2
162
(21.4)
Canara Bank- August 05, 2015
Particulars (` cr)
1QFY16E
1QFY15
y-o-y (%)
4QFY15
q-o-q (%)
PAT
585
807
(27.5)
613
(4.5)
Tata Global Beverages Ltd (Consol)- August 06, 2015
Particulars (` cr)
1QFY16E
1QFY15
y-o-y (%)
4QFY15
q-o-q (%)
Net sales
1,987
1,884
5.4
1,875
6.0
EBITDA
205
201
2.0
188
9.0
EBITDA margin (%)
10.3
10.7
10.0
Net profit
104
97
6.4
4
2,553.8
www.angelbroking.com
Market Outlook
August 4, 2015
Economic and Political News
Manufacturing PMI grows at fastest pace in 6 months in July
Odisha seeks `3,500cr assistance via Niti Aayog
NCLT provisions to be notified in phases
Foreign Investment Promotion Board clears 18 FDI proposals
Corporate News
NTPC to reduce dependence on fossil fuels to 56% by 2032
Bata India and Relaxo Footwear settle litigation over Sparx trademark
Viacom Inc Acquires 50% Stake In Prism TV for `940cr
Top Picks
Large Cap
Market Cap
CMP
Target
Upside
Company
Sector
Rating
(` Cr)
(`)
(`)
(%)
Axis Bank
Financials
136,975
Buy
577
716
24.2
ICICI Bank
Financials
181,573
Buy
313
370
25.3
Infosys
IT
247,852
Buy
1,079
1,306
21.0
Power Grid
Power
73,556
Buy
141
170
20.9
Sun Pharma
Pharma
199,861
Buy
831
950
14.4
TCS
IT
491,239
Buy
2,508
3,168
26.3
Tech Mahindra
IT
50,350
Buy
524
646
23.4
Yes Bank
Financials
34,774
Buy
832
1,006
21.0
LIC Housing Fin.
Financials
25,806 Accumulate
511
553
8.1
Source: Angel Research, Bloomberg
Mid Cap
Market
CMP
Target
Upside
Company
Sector
Rating
Cap (` Cr)
(`)
(`)
(%)
Bajaj Electricals
Others
2,642
Buy
262
341
30.1
Garware Wall Rope Others
702
Buy
296
390
31.7
Hindustan Media Ven. Media
1,808
Buy
246
292
18.5
MBL Infrastructures Construction
1,133
Buy
273
395
44.3
Mangalam Cements Cement
705
Buy
264
349
32.1
Minda Industries
Auto Ancillary
888
Buy
560
652
16.4
MT Educare
Others
474
Buy
119
141
18.3
Radico Khaitan
Others
1,237
Buy
93
112
20.4
Source: Angel Research, Bloomberg
www.angelbroking.com
Market Outlook
August 4, 2015
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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ownership of more than 1% in the company covered by Analyst. Angel or its associates/analyst has not received any compensation /
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