Indian stock market and companies daily report (February 10, 2012, Friday)

The domestic markets are expected to open flat to negative tracking negative opening in most of the Asian markets. Indian markets rose on Thursday, with the Nifty index hitting a 27-week high, as optimism that Greek leaders are nearing an agreement on austerity measures, that could secure them a new €130bn bailout from the EU and the IMF, easing some of the concerns about the nation's ongoing going debt crisis.

Globally, U.S. stocks closed in green yesterday mainly on the back of positive news about Greece as well as some upbeat U.S. jobs data. The U.S. Labor Department reported that the initial jobless claims for U.S. fell to 358,000 in the week ended February 4th from the previous week's revised figure of 373,000. Indian investors, meanwhile, would keenly watch out for the domestic industrial production growth (Bloomberg estimate – 2.6%) for the month of December due to be released today. Also, consumer sentiment and trade balance data of the U.S. will be on radar.

Markets Today

The trend deciding level for the day is 17,773 / 5,392 levels. If Nifty trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,937 – 18,043 / 5,444 – 5,476 levels. However, if Nifty trades below 17,773 / 5,392 levels for the first half-an-hour of trade then it may correct up to 17,667 – 17,503 / 5,360 – 5,307 levels.

3QFY2012 - Result Reviews

Tata Steel

For 3QFY2012, Tata Steel reported net loss on a consolidated basis due to weak performance from its European and Southeast Asian operations. Consolidated net sales increased by 13.8% yoy to Rs.33,103cr, above our estimate of Rs.30,992cr, mainly on account of increased average realizations in rupee terms. Standalone net sales increased by 12.3% yoy to Rs.8,305cr. Consolidated sales volumes stood at 5.8mn tonnes in 3QFY2012 compared to 5.9mn tonnes in 3QFY2011. Average realization/tonne decreased by 3.4% and 0.6% to US$975 and US$1,149 in Tata Steel India and Tata Steel Europe operations, respectively. However, EBITDA/tonne decreased by 7.1% and US$303 in Tata Steel India. EBITDA/tonne of Tata Steel Europe operations stood at US$(1) compared to US$25 in 3QFY2011 on account of higher raw-material costs. India operations EBITDA decreased by 9.5% yoy to Rs.2,553cr. European operations reported EBITDA of US$(147)mn and Southeast Asian operations reported EBITDA of US$(2)mn during the quarter. Consequently, consolidated EBITDA decreased by 49.9% yoy to Rs.1,717cr. Hence, Tata Steel reported net loss of Rs.603cr in 3QFY2012 compared to adjusted PAT of Rs.1,125cr in 3QFY2011. The company’s net debt has increased to US$9.5bn as on December 31, 2011, compared to US$8.5bn as on September 30, 2011. Tata Steel’s Jamshedpur 2.9mn tonnes brownfield expansion project remains on track to be completed during 4QFY2012. We maintain our Buy recommendation on the stock, while we keep our target price under review.

Hindalco

Hindalco’s standalone 3QFY2012 top line was above our estimate, while its bottom line was slightly below our expectation. The company’s net sales increased by 11.4% yoy to Rs.6,590cr (above our estimate of Rs.5,909cr) mainly on account of higher volumes in the aluminium and copper segments. In the aluminium segment, alumina, aluminium, wire rods and flat products production increased by 7.1%, 7.8%, 6.7% and 20.4% yoy to 343k, 146k, 25k and 56k, respectively. In the copper segment, copper cathode and CC rods production grew by 9.4% and 42.3% yoy to 88k and 38k, respectively. However, the aluminium segment’s EBIT decreased by 33.4% yoy to Rs.310cr due to increased input costs (mainly coal and crude derivatives). Nevertheless, the copper segment’s EBIT rose by 51.1% yoy to Rs.216cr due to higher treatment and refining charges and by-product credits. Overall, Hindalco’s EBITDA decreased by 3.3% yoy to Rs.716cr and EBITDA margin slipped by 165bp yoy to 10.9% during 3QFY2012. Interest expenses grew by 53.8% yoy to Rs.79cr and other income grew by 48.6% yoy to Rs.90cr. Consequently, net profit decreased by only 1.9% yoy to Rs.452cr (below our estimate of Rs.480cr). The company reported that all its expansion plans are on track. The stock is under review currently.

Ambuja Cements

During 4QCY2011, Ambuja Cements’ standalone top line increased strongly by 30.2% yoy to Rs.2,329cr on account of 17.5% yoy improvement in realization to Rs.4,197/tonne and a 10.8% yoy increase in volumes to 5.55mn tonnes. OPM declined by 60bp yoy to 19.1% on account of higher raw-material costs, power and fuel costs and freight costs. On the bottom-line front, net profit for the quarter rose by 17% yoy to Rs.302cr, aided by better operating performance, 72.2% yoy growth in other income to Rs.65cr and 53% saving in interest expense to Rs.10cr. Reported net profit was lower by Rs.33cr on account of an exceptional item relating to change in accounting method for stock options, adjusting for which net profit would have grown by 30% yoy. We continue to remain Neutral on the stock.

ACC

ACC posted 27.8% yoy growth in its standalone net sales to Rs.2,503cr on account of 17.8% growth in sales volumes and 20.3% higher realization. The company’s sales volumes for the quarter stood at 5.95mn tonnes, up 6.3% yoy, on account of higher capacity (on a yoy basis) operational at Wadi and Chanda during the quarter. Further, realization stood higher by 20.3% yoy to Rs.4,206/tonne. Despite the substantial yoy improvement in realization, OPM rose only marginally by 100bp due to the surge in operating costs. The company’s net profit rose by 83.8% yoy to Rs.470cr. The company’s profit was boosted by tax credit of Rs.228cr during the quarter (vs. 82cr in 4QCY2010), adjusted for which profit would have been at Rs.242cr higher by 39.3% yoy. We remain Neutral on the stock.

Apollo Tyres

Apollo Tyres (APTY) registered robust results for 3QFY2012 with consolidated top line posting better-than-expected 36.3% yoy (12.4% qoq) growth to Rs.3,228cr, aided by an 18.2% yoy (8.3% qoq) jump in volumes and 15.3% yoy (3.8% qoq) increase in net average realization. Domestic, Europe and South Africa revenue grew strongly by 46.2%, 26.3% and 27.9% yoy, respectively. Operating margin expanded by 202bp qoq to 10%, mainly due to 100bp savings on the raw-material front. As a result, adjusted net profit grew by 63.8% qoq to Rs.127cr. However, on a yoy basis, adjusted net profit reported modest 5.8% yoy growth, largely due to contraction in operating margin and higher interest expense (up 38.2% to Rs.73cr). During the quarter, APTY made a provision of Rs.29cr in relation to a penalty following settlement agreement with South Africa Competition Commission for the company’s operations in South Africa. At Rs.76, the stock is trading at 6.8x its FY2013E earnings. We retain our Buy recommendation on the stock; however, the target price is under review. We shall release a detailed result note soon.

MRF – 1QSY2012

MRF reported top-line growth of 32.7% yoy to Rs.3,138cr in 1QSY2012 from Rs.2,367cr in 1QSY2011. The company’s EBITDA margin came in at 9.0%, 174bp higher on a qoq basis, on account of a decrease in overall expenses as a percentage of sales. On the profitability front, MRF reported an increase of 9.7% yoy, from Rs.103cr to Rs.113cr. We maintain our Buy recommendation on the stock with a target price at Rs.9,647, based on a target PE of 8x its SY2013E earnings.

Page Industries

Page Industries announced its 3QFY2012 numbers. The company’s net sales increased by 28.4% yoy to Rs.172cr (Rs.134cr). EBITDA improved only by 6.3% yoy to Rs.30cr (Rs.28cr), despite higher revenue growth due to margin compression. EBITDA margin declined by 356bp yoy to 17.2% (20.7%), mainly due to higher raw-material cost, which increased to 51.2% of net sales in 3QFY2012 vs. 48.3% of net sales in 3QFY2011. Despite lower growth in EBITDA, PAT increased by 27.6% yoy to Rs.20cr (Rs.16cr), in-line with top-line growth on the back of higher other income, which increased by 78.2% to Rs.4cr and lower tax rate, which came in at 31.5% in 3QFY2012 vs. 41.6% in 3QFY2011. PAT margin declined marginally by 7bp yoy to 11.6%. We will be coming out with a detailed report post management interaction. We continue to maintain our Neutral recommendation on the stock.

FAG Bearings - 4QCY2011

FAG Bearings (FAG) registered a strong performance in 4QCY2011, with betterthan- expected net sales growth of 31.4% yoy (4.8% qoq) to Rs.350cr against our expectation of Rs.310cr. EBITDA margin contracted by 150bp yoy (170bp qoq) to 18.1% mainly due to higher raw-material expenses. Raw-material cost increased primarily on the trading part of the business, which we believe could be due to the depreciation of INR against the Euro. Purchase of traded goods as a percentage of sales jumped substantially by 480bp yoy during the quarter. However, 380bp yoy savings in other expenditure arrested further fall in margins. Led by strong top-line performance net profit posted better-than-expected 27.3% yoy growth to Rs.43cr. We expect the company to sustain its strong performance going ahead, led by likely easing of interest rates from 1QFY2013, which is expected to revive demand in the automotive and industrial segment. We maintain our Buy view on the stock; however, our target price is under review.

Anant Raj

Anant Raj Industries announced its 3QFY2012 numbers. Net sales declined by 25.9% yoy to Rs.92cr (Rs.124cr), well below our estimate. EBITDA declined by 36.5% yoy to Rs.49cr (Rs.77cr) due to lower revenue and margin compression. EBITDA margin declined by 888bp yoy to 53.2% (62.1%). Adjusted PAT declined by 37.3% yoy to Rs.31cr (Rs.50cr) and PAT margin declined by 622bp yoy to 31.5% (50.3%), almost in-line with EBITDA margin contraction. We will be coming out with a detailed report post management interaction. We have an Accumulate rating on the stock with a target price of Rs.78.

HAIL – 4QCY2011

Honeywell announced its 4QCY2011 numbers. The top line grew by 21% qoq to Rs.503cr in 4QCY2011 from Rs.412cr in 4QCY2010. Annual sales for CY2011 stood at Rs.1619, 19% higher from CY2010. The company's margin came in at 9.1%, 259bp higher on a qoq basis, on account of a decrease in raw-material and employee cost as percentage of sales. Net profit for the quarter rose by 31.5% yoy, from Rs.25.7cr to Rs.33.9cr. Annual net profit stood at Rs.107cr, 6.7% higher yoy. We maintain our Buy recommendation on the stock; our target price is under review.

Dishman Pharmaceutical

For 3QFY2012, Dishman Pharmaceutical posted net sales of Rs.265.5cr, registering 14.5% yoy growth. The company’s growth was driven by the MM segment, which reported 30.9% yoy growth. The CRAMS segment reported 6.9% yoy growth. The company’s OPM came in at 15.9%; however, adjusted for forex losses, it stood at 20.1%. The company reported higher tax expenses during the quarter. Consequently, net profit came in at Rs.16.7cr, lower than our expectation of Rs.19.8cr. However, given the traction in growth and improving profitability, we maintain our Buy rating on the stock; the target price is under review.

JK Tyre

JK Tyre (JKI) reported dismal set of results for 3QFY2012, posting net loss on the bottom-line front, led by higher interest expense and forex loss of Rs.38cr. For 3QFY2012, net sales grew strongly by 20.7% yoy (10.4% qoq) to Rs.1,423cr. Operating performance bounced back sequentially with EBITDA margin expanding by 297bp to 5.1%, driven by raw-material cost savings (100bp qoq) and decline in other expenditure (200bp qoq). JKI, however, posted net loss of Rs.21cr on account of an 87.8% yoy increase in interest expense to Rs.45cr and forex loss of Rs.38cr. The stock rating is currently under review.

3QFY2012 - Result Previews

DLF

DLF is expected to announce its 3QFY2012 results. We expect the company’s net sales to increase by 9.6% yoy to Rs.2,719cr. EBITDA margin is expected to contract by 377bp yoy to 43.7% on account of higher input costs. Net profit is expected to decline by 11.1% yoy to Rs.414cr. We maintain our Neutral rating on the stock.

RCom

Reliance Communication (RCom) is slated to announce its 3QFY2012 results. We expect the company to record revenue of Rs.4,968cr, up 3.7% qoq. Growth is expected primarily on the back of qoq flat ARPM at Rs.0.45/min and 1.0% qoq growth in MOU to 229min. EBITDA margin is expected to increase by 83bp qoq to 29.1%. PAT for the quarter is expected to come in at Rs.144cr. We maintain our Neutral view on the stock.

Britannia

Britannia is expected to announce its 3QFY2012 results. For the quarter, we expect Britannia to report healthy 18% yoy growth in revenue to Rs.1,271 due to improvement in sales mix. For the quarter, we expect the company to report an 11bp yoy margin improvement. Earnings for the quarter is expected to grow by 20% yoy to Rs.45cr on the back of healthy top-line growth. At the CMP, the stock is trading at 21.7 x F2013E EPS of Rs.22.5. We recommend Neutral on the stock.

Aurobindo Pharma

For 3QFY2012, Aurobindo Pharma is expected to post net sales of Rs.1,295cr, registering 20.8% yoy growth. The company is expected to post OPM of 12.1%, reporting a dip of 652bp yoy. Net profit is expected to come in at Rs.98.5cr, down 49% yoy. At the CMP, the stock is trading at 8.4x FY2013. We continue to maintain our Buy recommendation on the stock with a target price of Rs.166.

CCCL

Consolidated Construction Consortium (CCCL) is expected to post modest 8.0% yoy growth in its top line to Rs.535.9cr, given the slow-moving infra orders forming ~40% of its total order book. On the EBITDA front, we expect the company to continue to report a dismal performance and register a dip of 654bp yoy to 3.2%, in-line with management's guidance. Against this backdrop, the bottom line is expected to post loss of Rs.5.2cr in 3QFY2012 vs. profit of Rs.16.7cr in 3QFY2011. We continue to maintain our Neutral view on the stock.

Economic and Political News
- Current account deficit seen widening as exports struggle
- Government nods for JVs by defense PSUs
- Exports up 10.1%; Imports jump by 20.3% in January 2012

Corporate News
- Additional tax on diesel cars will further impede industry growth: M&M
- CEAT to set up Rs.250cr plant in Bangladesh
- Tata Global, PepsiCo JV eyes Rs.700cr turnover in the next five years
- Tulip Telecom CEO Sanjay Jain quits
- Unity Infraprojects bags orders worth Rs.485cr

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Indian stock market and companies daily report (February 09, 2012, Thursday)

The domestic markets are expected to open in the red tracking flat to negative opening in most of the Asian markets. Indian markets posted a volatile trading session and closed in green on Wednesday amidst optimism towards the developments in Greece’s debt restructuring deal.

Globally, however U.S. and European stocks remained choppy and ended flat, as the markets waited for additional news from Greece. The Greek government, which is close to announce another round of spending cuts in order to secure bailout funds is also in negotiations with private creditors on a voluntary debt reduction.

Indian investors, meanwhile, would keenly watch out for the domestic industrial production growth (Bloomberg estimate-3%) for the month of December, due to be released on Friday. Also initial jobless claims data of the U.S. for the previous week due to be released today will be on radar.

Markets Today

The trend deciding level for the day is 17,699 / 5,363 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,818 – 17,928 / 5,402 – 5,435 levels. However, if NIFTY trades below 17,699 / 5,363 levels for the first half-an-hour of trade then it may correct up to 17,588 – 17,469 / 5,330 – 5,292 levels.

TCS establishes JV with Mitsubishi for Japanese market

TCS has announced a 60:40 JV with Japan’s Mitsubishi Corp. to serve clients in the East Asian region. The companies will invest US$5mn to set up a delivery center in Japan. The JV company will offer a full service suite of IT, BPO and infrastructure services to Japanese corporations. TCS said that this JV comes against the backdrop of a strong yen, the globalization of supply chains and a growing trend toward overseas mergers and acquisitions, all of which act as catalysts for the increasing globalization of Japanese companies. This has brought heightened interest in the role of global IT services to link domestic and overseas operations.

The JV is important for TCS as the company derives only ~1% of its revenue from Japanese markets and 7% from the Asia Pacific region. This is a good opportunity for TCS in which it can leverage a partner like Mitsubishi and get an entry into the world's third largest economy and provide software services there. This will be positive in the sense that the market share of TCS in Japan will rise as a result of the partnership with Mitsubishi and the company will also have a presence across all geographies. We maintain our Accumulate rating on the stock with a target price of Rs.1,262.

3QFY2012 - Result Reviews

ONGC

ONGC’s 3QFY2012 profitability declined on account of increased subsidy burden. The company’s top line decreased by 2.5% yoy at Rs.18,124cr. ONGC’s crude oil net realization declined by 30.9% yoy to US$44.8/bbl on account of higher subsidy burden. The company shared a subsidy burden of Rs.12,536cr in 3QFY2012 vs. Rs.4,222cr of subsidy shared in 3QFY2011and Rs.5,713cr in 2QFY2012. Oil sales volumes decreased by 4.0% yoy to 5.6mn tonnes, while gas sales volumes decreased by 1.4% yoy to 5.0bcm during 3QFY2012. EBITDA margin slipped by 1,183bp yoy to 61.0% and EBITDA decreased by 23.6% yoy to Rs.11,051cr. The company’s depreciation and amortization expenses increased by 24.5% yoy to Rs.4,532cr due to higher dry well write-offs. The company reported one-time gain of Rs.3,142cr related to royalty reimbursed by Cairn India (initially paid by ONGC for August 2009-September 2011). Excluding this one-time gain, adjusted net profit decreased by 49.2% yoy to Rs.3,599cr. Reported net profit decreased by 4.8% yoy to Rs.6,741cr. For FY2013, ONGC has given oil and gas production guidance of 28.8mn tonnes (+4.0% yoy) and 27bcm (+7.0% yoy). The stock is under review currently.

Bharti Airtel

Bharti Airtel (Bharti) reported a mixed performance for 3QFY2012, with revenue coming in-line with our as well as street expectations, while it disappointed on the operating and profitability fronts due to higher depreciation and amortization expenses. Bharti’s consolidated revenue stood at Rs.18,477cr, up 6.9% qoq. Revenue from mobile services for India came in at Rs.10,176cr, up 4.0% qoq on the back of a 3.2% qoq increase in average revenue per minute (ARPM) to Rs.0.45/min. However, MOU declined by 1.0% qoq due to slow traffic growth. Revenue of mobile India business was also impacted because of the slight decline in VAS share (even when 3G services are launched in all the circles and this was seasonally a strong quarter for telecom companies), which decreased to 14.3% in 3QFY2012 from 14.5% in 2QFY2012. All this led to 2.2% qoq growth in ARPU to Rs.187/month. Zain Africa’s revenue stood at Rs.5,358cr, up 16.7% qoq, aided by addition of 2.5mn subscribers, taking its total subscriber base to 50.9mn and a 0.1% qoq increase in ARPM to US¢5.7/min. However, MOU declined by 2.5% qoq to 125min, which led to a 2.3% qoq fall in ARPU to US$7.1/month.

EBITDA margin of mobile India as well as Africa business increased by 0.18bp and 0.47bp qoq to 33.8% and 26.7%, respectively. However, EBITDA margin of all the other business segments declined sharply, which led to a 141bp qoq decline in Bharti’s consolidated EBITDA margin to 32.2%. PAT came in at Rs.1,011cr, down 1.5% qoq, negatively impacted by higher depreciation cost of Rs.3,585cr in 3QFY2012 vs. Rs.3,184cr in 2QFY2012 and higher tax rates. Net profit stood at Rs.1,011cr, down 1.5% qoq, negatively impacted by higher depreciation cost of Rs.3,585cr in 3QFY2012 vs. Rs.3,184cr in 2QFY2012 and higher tax rate of 35.2% vs. 32.4% in 2QFY2012. We maintain our Neutral rating on the stock.

Tech Mahindra

Tech Mahindra reported muted set of 3QFY2012 results. Dollar revenue came in at US$288.7mn, down 2.5% qoq due to a 0.5% qoq decline in volume and ~2.0% qoq negative cross-currency impact. Dollar revenue from BT declined by 7.8% qoq and revenue from non-BT grew by just 0.6% qoq. In rupee terms, revenue came in at Rs.1,445cr, up 8.4% qoq, largely aided by qoq rupee depreciation. EBITDA margin grew by 90bp qoq (lower than margin expansion reported by peers) to 16.2% because of depreciating rupee, which absorbed the negative impact of onsite wage hike given. PAT, including share from Satyam, came in at Rs.276cr. Overall results were weak. The only growth driver for the company is the non-BT business, as BT is retendering its contracts. The stock is currently under review.

Bharat Forge

For 3QFY2012, Bharat Forge (BHFC) reported an in-line 21.1% yoy (3.4% qoq) jump in its standalone revenue to Rs.941cr, driven by a 15.3% yoy (1.3% qoq) jump in domestic revenue and 29.2% yoy (7.6% qoq) jump in exports revenue. While volume in tonnage terms increased by 15.2% yoy (3.1% qoq) to 55,412MT on strong export demand, average net realization grew by 6% yoy (1.45% qoq), led by higher contribution from the non-auto segment. Strong growth in the CV segment and non-auto segment in the Europe and U.S. benefitted the company’s exports performance. On the operating front, margin improved by 38bp yoy (99bp qoq) to 24.7%, owing to better product-mix and decline in raw-material expenses. Net profit grew by 24.9% yoy (down 3% qoq) to Rs.103cr, led by strong operating performance. However, growth was restricted on account of forex loss of Rs.16.1cr. The stock rating is currently under review.

Orchid Chemicals

For 3QFY2012, Orchid Chemicals’ net sales came in at Rs.482.1cr, growth of 4.2% yoy. During 3QFY2012, API sales rose to Rs.353.3cr as compared to Rs.329.7cr in 3QFY2011. While sales were lower than expected, OPM came in at 23.7%, just in-line with our expectation of 24%. However, higher interest expense during the period led to lower-than-expected net profit. Net profit before exceptional items declined by almost 22.1% during the period. We maintain our Buy recommendation; however, the target price is under review.

Alembic Pharmaceuticals

For 3QFY2012, Alembic Pharmaceuticals’ net sales came in at Rs.383cr, up 15.0% yoy. During the quarter, exports rose by 45.4% yoy to Rs.165.6cr. While sales were just in-line with our estimate, OPMs came in at 18%, higher than our expectation of 14%. Net profit for the quarter came in at Rs.442.3cr. We maintain our Buy recommendation on the stock with a target price of Rs.77.

3QFY2012 - Result Previews

Tata Steel

Tata Steel is slated to report its consolidated 3QFY2012 results. We expect the company’s net sales to increase by 6.5% yoy to Rs.30,992cr, mainly on account of higher steel prices. However, EBITDA margin is expected to contract by 276bp yoy to 9.0% on account of higher raw-material costs (mainly in its European operations). Net profit is expected to decrease by 35.1% yoy to Rs.729cr. We maintain our Buy rating on the stock with a target price of Rs.510.

Hindalco

Hindalco's fully owned subsidiary, Novelis reported loss at the net level for the seasonally weak 3QFY2012. The company’s net sales decreased by 4.0% yoy to US$2.5bn due to lower volumes as well as aluminium price. Shipments of aluminum rolled products decreased by 9.4% yoy to 648kt, primarily due to destocking in Europe on the back of economic uncertainty and weakness in the electronics business in Asia. Adjusted EBITDA decreased by 10.5% yoy to US$213mn on account of higher costs and lower volumes. Also, EBITDA/tonne declined by 1.0% yoy to US$312 during the quarter. Novelis reported net loss of US$12mn compared to a loss of US$46mn in 3QFY2011. The company is witnessing recovery in demand during 4QFY2012; it remains on track to achieve EBITDA of ~US$1bn during FY2012.

Hindalco is slated to report its 3QFY2012 results. We expect the company’s standalone net sales to decrease by 0.1% yoy to Rs.5,909cr. EBITDA margin is expected to contract by 155bp yoy to 10.0% on account of rise in costs of key inputs (primarily coal). Net profit is expected to increase by 4.3% yoy to Rs.480cr. We keep our rating and target price under review.

Ambuja Cements

Ambuja Cements is expected to announce its 4QCY2011 results. On the top-line front, the company is expected to post strong growth of 23.2% yoy to Rs.2,204cr. Strong performance on the top-line front is expected to be driven by higher yoy realization growth (13.7%) and 8.4% yoy growth in dispatches. OPM is expected to increase by 104bp yoy to 21.2%. The company’s bottom line is expected to grow by 10.9% yoy to Rs.286cr. We maintain our Neutral view on the stock.

ACC

ACC is slated to announce its 4QCY2011 results. The company is expected to post top-line growth of 18.7% yoy to Rs.2,325cr, primarily on account of improvement in realization by 14.3%yoy. However, cost pressures are expected to outweigh realization growth and OPM is expected to contract marginally by 6bp yoy to 17.3%. The company’s bottom line is expected to decline by 14.5% yoy to Rs.219cr. We maintain our Neutral view on the stock.

Apollo Tyres

Apollo Tyres is slated to announce its 3QFY2012 results. On a consolidated basis, we expect the company to report a strong 22% yoy increase in revenue to Rs.2,900cr. Sequentially, EBITDA margin is expected to improve by 50bp to 8.5%, led by a sequential decline in raw-material prices. However, net profit is estimated to remain flat on a qoq basis to Rs.79cr. The stock rating is under review.

Anant Raj Industries

Anant Raj Industries is expected to announce its 3QFY2012 results. We expect the company’s net sales to increase by 3.1% yoy to Rs.128cr. EBITDA margin is expected to contract by 316bp yoy to 58.9% on account of higher input costs. Net profit is expected to decline marginally by 0.5% yoy to Rs.50cr. We maintain our Accumulate rating on the stock with a target price of Rs.78.

FAG Bearings – 4QCY2011

FAG Bearings is set to announce its 4QCY2011 results. We expect the company to deliver healthy 17% yoy growth in revenue to Rs.307cr. On the operating front, we expect FAG to post a 100bp yoy contraction in operating profit margin to 18.8%. However, net profit is expected to increase by healthy 14% yoy to Rs.39cr. The stock rating is under review.

Dishman Pharmaceuticals

For 3QFY2012, we expect, Dishman Pharmaceuticals to post net sales of Rs.305cr, up 5% yoy. OPM is expected to come in at in 17.9% vis-à-vis 23.1% in 3QFY2011. Consequently, net profit is expected to come in at Rs.19.8cr, down 30.5% yoy. We maintain our Buy recommendation on the stock with a target price of Rs.77.

Economic and Political News
- Direct tax mop up to miss Rs.5.3 lakh cr budget target
- Exports from SEZs grow 17% in April-December 2011
- IT, ITeS revenue crosses US$100bn milestone: Nasscom
- Indian IT export revenue expected to grow by 11-14% and domestic revenue
by 13-16% for FY2013: Nasscom
- January 2012 car sales rise by 7.2%

Corporate News
- Bharti seeing benefits from India call price hike
- Ceat to set up a 65 MT/day manufacturing facility in Bangladesh
- RIL in talks with airlines for fuel supply
- Tata Power explores prospects overseas
- Thomas Cook starts stake sale in Indian arm

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Indian stock market and companies daily report (February 02, 2012, Thursday)

The domestic markets are expected to open in the green tracking upbeat economic data releases from around the world.
The US markets closed higher as traders reacted positively to the latest batch of economic data. The strength on Wall Street was partly due to the release of a report from payroll processor ADP showing a continued increase in private sector employment in the month of January. A separate report from the Institute for Supply Management showing a continued expansion in manufacturing activity in the month of January also generated buying interest, with the index of activity in the sector reaching a seven-month high.
The release of the ISM report on U.S. manufacturing also came after the release of separate reports showing expansions in manufacturing activity in both Germany and China.
Indian shares ended firm near its 12-week high on Wednesday, as data showing expanding domestic manufacturing activity and upbeat auto sales numbers for January boosted investor sentiment. Indian investors meanwhile would keenly watch out for the weekly inflation numbers due to be released today.

Markets Today
The trend deciding level for the day is 17230 / 5,213 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,398 – 17,495 / 5,267 – 5,299 levels. However, if NIFTY trades below 17,230 / 5,213 levels for the first half-an-hour of trade then it may correct up to 17,132 – 16,964 / 5,182 – 5,128 levels.

Auto sales numbers – January 2012
Maruti Suzuki (MSIL)
MSIL reported better-than-expected volume growth of 5.2% yoy (25.3% mom) to 115,433 units in January 2012, led by 22.4% (24.7% mom) and 54.3% yoy growth in the domestic compact (driven by Swift) and exports segment, respectively. Total domestic volumes, however, remained flat largely due to a 2.4% yoy decline (up 34.8% mom) in sales in the mini segment. Meanwhile, MSIL unveiled the all new compact Swfit Dzire priced at Rs.4.79lakhs (petrol) and Rs.5.8lakhs (diesel) with exciting new features and better fuel efficiency.
Mahindra & Mahindra (MM)
MM registered a healthy 12% yoy (8.3% mom) increase in its total volumes to 64,072 units on account of strong performance by the automotive segment, which grew by 21.8% yoy (4.6% mom). Performance of the automotive segment was driven by continued buoyancy in the four-wheeler pick-up (up 34.7% yoy/flat mom) and passenger UV (up 14.7% yoy/2% mom) segments. The CV segment also recorded strong volume performance, witnessing growth of 50.8% yoy (47.1% mom). The tractor segment posted a 5.6% yoy decline in volumes during the month; however, on a sequential basis, volumes improved by strong 18.1%.
Tata Motors (TTMT)
TTMT posted a strong 16% yoy (6.3% mom) increase in total sales to 87,467 units, driven by 16.3% (down 1.2% mom) and 15.5% yoy (19.6% mom) growth in the commercial vehicle (CV) and passenger vehicle (PV) segments, respectively. The CV segment’s performance was led by healthy 12.6% and 18.7% yoy growth in the medium and heavy commercial vehicle (MHCV) and light commercial vehicle (LCV) segments, respectively. In the PV segment, Nano, Indica and Indigo volumes grew by 15.2%, 8.9% and 9.6% yoy, respectively.
Hero MotoCorp (HMCL)
HMCL reported healthy 11.5% yoy (down 3.7% mom) growth in volumes to 520,272 units, led by continued momentum across all product segments. New product launches and refreshed product ranges continued to drive HMCL’s volume performance.
TVS Motor (TVSL)
TVSL posted a modest 5.1% yoy increase in total sales in January 2012 to 173,514 units, largely due to subdued sales in the motorcycle segment. While two-wheeler volumes grew by 5.8% yoy (1.9% mom), three-wheeler volumes declined by 29.9% yoy (down 4.8% mom). Growth in the two-wheeler segment was led by a strong 20.2% yoy increase in moped sales; however, scooter volume growth slowed down considerably and grew by 1.8% yoy (down 7.4% mom).

3QFY2012 - Result Reviews
Mahindra Satyam
Mahindra Satyam announced its 3QFY2012 results, which were in-line with our expectations on the revenue front but were higher than ours as well as street’s expectations on the operating and bottom-line fronts. Revenue came in at US$325mn, down 1.6% qoq, due to a 1.3% qoq decline in volume. Also, USD revenue of the company was impacted by 1.4% qoq due to unfavorable crosscurrency movement. In INR terms, revenue came in at Rs.1,718cr, up 8.9% qoq. The company’s EBITDA and EBIT margin increased by 87bp and 113bp qoq to 16.2% and 13.9%, respectively, despite giving wage hikes during the quarter because of steep INR depreciation. PAT came in at Rs.308cr, up 29.5% qoq, aided by forex gain of Rs.66cr, which led to other income of Rs.151cr in 3QFY2012 as against Rs.97cr in 2QFY2012. The stock is currently under review.
Ashok Leyland – 3QFY2012
Ashok Leyland (AL) registered poor bottom-line performance during 3QFY2012 due to significant erosion in operating margins, led by higher employee and other expenses. AL reported better-than-expected 29.3% yoy (down 6.9% qoq) growth in its top line to Rs.2,880cr, driven by a 15% yoy (6.1% qoq) increase in net average realization and 12.4% yoy growth in volumes. Average net realization improved to Rs.1,389,528 on account of price increases to mitigate raw-material cost pressures and emission norm changes. On the operating front, EBITDA margin witnessed a steep 340bp qoq contraction to 7.3% against our expectation of 10.1% due to higher employee and other expenses. Other expenditure to net sales ratio unexpectedly increased by 170bp qoq and 100bp yoy during the quarter. Raw-material cost remained more or less stable on a yoy and qoq basis, led by cooling of commodity prices. Driven by weak operating performance, net profit declined by 56.6% sequentially. However, on a yoy basis, net profit grew by 54.3%, largely due to low base of last year. The stock rating is currently under review.
Finolex cables
Finolex Cables announced its 3QFY2012 numbers. The company’s net sales declined by 2.6% yoy to Rs.499cr. The electrical cables segment continued its strong growth, registering 21.6% yoy growth to Rs.417cr. The communication segment, however, registered a 22.7% yoy decline to Rs.41cr. EBITDA for the quarter declined by 18.8% yoy to Rs.41cr, largely due to margin compression. EBITDA margin declined by 165bp yoy to 8.3%, mainly due to higher other expenditure, which increased to 10.4% of net sales in 3QFY2012 vs. 8.3% of net sales in 3QFY2012. During the quarter, PAT declined by 47.7% yoy to Rs.14cr and PAT margin declined by 237bp yoy to 2.7%. The company witnessed forex loss of Rs.8cr during the quarter. We will be coming out with a detailed report post the management call. We continue to maintain our Buy rating on the stock with a target price of Rs.51.

3QFY2012 - Result Previews
Corporation Bank
Corporation Bank is slated to announce its 3QFY2012 results. We expect net interest income of the bank to decline by 9.7% yoy to Rs.760cr. Non-interest income growth is expected to be strong at 40.7% yoy to Rs.372cr. While operating income is expected to be flat, operating expenses are expected to go up by 23.7% yoy to Rs.458cr, leading to pre-provisioning profits declining by 8.4% yoy to Rs.675cr. Provisioning expenses are expected to decline by 22.7% yoy. Net profit is expected to decline by 3.1% yoy to Rs.371cr. Currently, we have an Accumulate rating on the stock with a target price of Rs.450.  Thermax
For 3QFY2012, we expect Thermax to report a 3.0% yoy decline in its top line to Rs.1,204cr, as high base effect created in 3QFY2011 and weak order inflows since the last couple of quarters will keep the company's revenue under strict check. The company's EBITDA margin is likely to compress by ~110bp yoy to 10.7% due to higher contribution of low-margin EPC contracts in the company’s aggregate revenue. Lower revenue and margin contraction are expected to drag down the company's PAT by 10.8% yoy to Rs.89.4cr. At the CMP, the stock is trading at 14.1x and 15.0x its FY2012E and FY2013E EPS, respectively. We remain Neutral on the stock.
Hexaware
Hexaware is slated to announce its 4QCY2011 results. We expect the company to post revenue growth of 4.1% qoq to US$82mn, majorly led by volume growth. In rupee terms, revenue is expected to come in at Rs.416cr, up 13.8% qoq. EBITDA margin is expected to expand by 140bp qoq to 20.1%. PAT is expected to come in at Rs.68cr. We maintain our Accumulate view on the stock with a target price of Rs.96.

Economic and Political News
- Manufacturing PMI jumps to 8-month high of 57.5
- December exports up 6.7% to US$25bn
- Fiscal deficit may be about 5.6% in FY2012: PMEAC
- Fertilizer industry wants higher gas price in new urea policy
- Outlook for the textiles industry in 2012 negative to stable: Fitch
- SEBI notifies IPP norms to help promoters dilute stake

Corporate News
- Coal India inks pact with worker unions on 25% hike in wages
- ICICI Bank to recast Rs.1,300cr loans in 4QFY2012
- ABG Shipyard bags Rs.500cr order from Shipping Corp.
- KEC International keen to take more business abroad

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Indian stock market and companies daily report (January 11, 2012, Wednesday)

Indian markets are expected to open in green taking cues from positive opening in most of the Asian markets today and firm closing in most of the global markets on Tuesday. The Indian markets ended higher yesterday on the back of positive global cues and renewed hopes of a CRR cut later this month. A decision by global ratings agency Moody's to upgrade India's rating to investment grade and reports showing an impressive 56% rise in FDI inflows in November helped revive appetite for riskier assets.
Globally, most of the US and European markets closed in green yesterday as a weaker US currency helped drive up the price of oil, other dollar-denominated commodities and resource stocks. Also, an announcement by the rating agency Fitch that a downgrade of the creditworthiness of France from the top credit rating of "AAA" within a year is not expected provided a boost to the market. The markets this week will be closely watching out from IIP numbers and Infosys results which will be released on January 12, 2012.

Markets Today
The trend deciding level for the day is 16,081/4,825 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,265–16,364/4,881– 4,912 levels. However, if NIFTY trades below 16,081/4,825 levels for the first half-an-hour of trade then it may correct up to 15,982–15,799/4,793–4,737 levels.

FDI equity inflows up 56% in November 2011 after two slack months
Indicating a positive investor sentiment amidst the ongoing macroeconomic concerns, FDI equity inflows into India increased by 56% to US$2.53bn in November 2011. According to officials, cumulative flows for the April-November period stood at US$22.83bn vs. US$19.43bn for FY2011.
FDI equity inflows for the past two months were sluggish, with September and October reporting a 16.5% yoy and 50% yoy decline in inflows, respectively. During FY2011, equity in India witnessed a sharp 25% dip in FDI, from US$25.6bn in FY2010 to US$19.43bn.
Telecom, IT, construction, power, housing and real estate are the major sectors attracting FDI, and Mauritius, Singapore, U.S., U.K., Netherlands, Japan, Germany and UAE are the major sources of FDI in India. We believe the pick-up in FDI inflows will have a positive impact on INR in the foreign exchange market.

KPIT’s infotainment platform achieves GENIVI compliance
KPIT Cummins (KPIT) has announced that its In-Vehicle Infotainment (IVI) platform is now compliant with GENIVI Compliance Specification Release 1.0. The GENIVI compliance program provides a set of specifications for GENIVI member companies to measure their products and services. Those that meet the specifications may be registered as GENIVI compliant and facilitate OEMs and Tier-1 suppliers to short list compliant offerings and simplify their vendor selection process. Automotive OEMs are aggressively pursuing the adoption of consumer electronics (CE) features in infotainment. KPIT's infotainment platform speeds up this process by leveraging the critical mass of open source community, which enables broader coverage and faster support of new CE technologies. This platform features automotive grade robustness, leverages scale to reduce total cost of ownership and is supported by a mature service delivery organization to speed up development of product variants across feature sets and geographies. The platform contains core services and frameworks to enable faster, contextaware human machine interface and application development. It is optimized for the latest ARM-based application processors from multiple silicon vendors as well as for the Intel Atom processor. We maintain our Accumulate recommendation on the stock with a target price of Rs.163.

Economic and Political News
- Government clears 20 FDI proposals worth Rs.1,935cr
- Indirect tax kitty up 16.1% in Apr-Dec
- Moody’s upgraded India’s short-term country ceiling on foreign currency
bank deposits, in addition to the three upgrades on December 20 last year
- Petroleum Ministry asked to follow IMO fuel emission norms

Corporate News
- MTNL to float Rs.200 cr tender for network expansion
- PSL Ltd wins Rs 280-cr order from Pratibha Ind
- TVS to introduce three products in 2012
- Wockhardt launches generic nasal spray for Rhinitis

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