The domestic markets are expected to open in green tracking positive cues from global markets. Germany’s finance minister said the nation will focus on measures to boost Europe’s economic growth, while hopes for an economic stimulus plan for China brightened sentiment as the country pledged its proactive fiscal policy and prudent monetary policy yesterday to shore up the world’s second-largest economy.
US markets rebounded as traders picked up stocks at reduced levels following the recent downward trend, which pulled the major averages down to four-month closing lows on Friday. However, trading activity was somewhat subdued, as lingering concerns about Europe and a lack of major US economic data kept some traders on the sidelines. Trading today could be impacted by the release of the National Association of Realtor's monthly report on existing home sales. Indian shares erased most of their early gains on Monday, as a weakening rupee, which was moving towards its record low of 55.04 against the dollar, and the slashing of India's 2012 economic growth forecast to 6.3% from the earlier 6.9% by Morgan Stanley gave way to some late-session profit taking.
Markets Today
The trend deciding level for the day is 16,210 / 4,911 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,271 – 16,359 / 4,933 – 4,960 levels. However, if NIFTY trades below 16,210 / 4,911 levels for the first half-an-hour of trade then it may correct up to 16,122 – 16,062 / 4,884 – 4,862 levels.
L&T bags orders worth Rs.7,44cr
Larsen & Toubro's (L&T) construction arm has bagged new orders worth over Rs.7,44cr under various divisions so far in 1QFY2013. The power transmission and distribution segment secured new orders worth Rs.479cr from key customers, including orders for electrical, instrumentation and automation works from National Mineral Development Corporation (NMDC), Jindal Power Limited and NTPC. An order has been secured from Power Grid Corp. for the construction of overhead transmission lines from Barh in Bihar to Gorakhpur in Uttar Pradesh. In the water and solar business, L&T construction has secured orders worth Rs.265cr from various customers for the construction of a solar thermal plant in Rajasthan and an EPC contract for the construction of a pumping station and allied works at Botad Branch Canal from Paliyad to Goma in Bhavnagar District, Gujarat.
At the CMP of Rs.1,189, the stock is trading at PE of 15.6x FY2014E earnings, which is below the historical trading multiple for L&T. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,553. Hence, we maintain our Buy recommendation on the stock.
Result Reviews
Nalco (CMP: Rs.61 / TP: Under Review)
Nalco reported disappointing 4QFY2012 results. The company’s net sales declined by 2.0% yoy to Rs.1,785cr (below our estimate of Rs.2,524cr). Raw-material cost as a percentage of net sales stood at 13.9% in 4QFY2012 compared to 12.2% in 4QFY2011. Further, power cost as a percentage of net sales stood at 28.5% in 4QFY2012 compared to 25.7% in 4QFY2011. Hence, EBITDA decreased significantly by 32.2% yoy to Rs.306cr and EBITDA margin contracted by 760bp yoy to 17.15%. Other income, however, grew by 63.9% yoy to Rs.159cr in 4QFY2012. Consequently, net profit decreased by 7.5% yoy to Rs.282cr (significantly above our estimate of Rs.115cr). We recommend Reduce on the stock; our target price is under review.
Economic and Political News
- RBI imposes restrictions on forex dealers as rupee breaches 55-mark
- Government to provide Rs.38,500cr subsidy to oil companies for 4QFY2012
- Lokayukta court orders probe against Yeddyurappa, Nirani
- White paper on black money a damp squib, states the obvious
Corporate News
- COT panel sets 2G price 17% above TRAI’s
- BHEL bags contract for 1,320MW Solapur power project
- JSW Steel output up 35% in April at 715,000 tonnes
- Dr. Reddy's launches much-delayed acidity drug in the U.S.
- Government fixes turnover target of Rs.68,000cr for MMTC
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