Indian Equity Research and Investment Strategy
Punj Lloyd has been awarded a contract by Reliance Gas Transportation & Infrastructure (RGTIL) for its east-west pipeline project for laying of pipeline & associated facilities.
The value of the contract is Rs 498 crore, which is inclusive of the Rs 180.16-crore placed earlier by RGTIL with the company. The work is scheduled to be completed by December 2007 end.
Crompton Greaves’ net profit rose 89.1% to Rs 68.76 crore in Q1 June 2007 over Q1 June 2006. Sales moved up 21% to Rs 896.07 crore in Q1 June 2007 over Q1 June 2006. Crompton Greaves’ principal activities are broadly classified into four strategic business units: power systems; consumer products; industrial systems and other.
Tata Power Company’s net profit moved up 56.09% to Rs 190.20 crore in Q1 June 2007 over Q1 June 2006. Sales rose 9.80% to Rs 1511.48 crore in Q1 June 2007 over Q1 June 2006.
Suzlon Energy’s net profit declined 53.8% to Rs 89.4 crore in Q1 June 2007 over Q1 June 2006. Total income dipped 8.85% to Rs 862.9 crore in Q1 June 2007 over Q1 June 2006.
As on date, the company said it has orders worth Rs 13,496.83 crore comprising Rs 1,711.21 crore domestic orders and Rs 11,785.62-crore export orders.
JP Morgan and Citigroup have upgraded ITC to a BUY previously from hold with a price target of Rs 195.
After 40% underperformance over the last 12 months, risk-reward looks favorable. Investors are focusing too much on cigarette volumes; we estimate that even if volumes were to decline by 5%, cigarette EBIT would increase 8% in FY08. ITC’s price hikes are heavily loaded in favor of its mid segment brands (~65% of volumes)
Target price increase to Rs195 from Rs130 reflects 1) rolling forward target P/E from FY08E to FY09E, given that we are approaching mid FY08E and expect valuations to start reflecting FY09E; 2) increase target multiple from 15x to 20x, toward the higher end of historical trading bands.
ITC Q1 Profit stands at Rs 783 crore up from Rs 652 crore a year ago [Up 20.2%]. Sales up from Rs 2850 crore to Rs 3325 crore.
With weak international markets [US Housing Data was the dampener], Dalal Street Bears are in action. Within the first 5 minutes of Trading the BSE Sensex was down 350 points.
HDFC Bank, BHEL, Tata Motors, SBI and Reliance Energy are the top losers in the SENSEX. All the SENSES stocks are hammered and positions unwound. Accordint to Hitesh Chotalia’s analysis all the support levels for the day are broken and the SENSEX is currently at 15,450.
All the Indian Indices are in RED. A Blood Bath on the opening day of August Futures.
Nifty is down 110 Points
Nifty Jr is down 180 Points
Nifty Bank is down 170 Points
Midcap CNX is down 140 Points
IT CNX is down 101 Points
We wonder what will be the fate of IPOs like IVR Prime where extremely wise men invested because they couldn’t read the P/E and other financials of the company 🙂
Update at 12:00 Noon:
BSE SENSEX is down 500 Points. All the sensex stocks are in Red except ITC and Ranbaxy Labs. We recommended a BUY on ITC this morning. Is this is temporary correction ? Well depends on the US Data. If its just a temporary slump, its ok as Dow had also hit an all time high. However if you can see cracks appearing in the US Data, then money will flow out of Stocks. I am sure Wall Street Analysts are burning the midnight oil to analyze their course of action for Firday.
Tags: Invest India, Dalal Street, Stocks, India
Maruti Udyog’s net profit rose 35.1% to Rs 499.60 crore in Q1 June 2007 over Q1 June 2006. Net sales rose 25.7% to Rs 3930.82 crore in Q1 June 2007 over Q1 June 2006. Both top line and bottom line exceeded market expectations. Recall Analysts were skeptical and negative about the performance of Auto companies.
MRF’s net profit rose 420% to Rs 42.5 crore in Q3 June 2007 over Q3 June 2006. Sales moved up 13.93% to Rs 1,133.43 crore in Q3 June 2007 over Q3 June 2007. MRF has declared interim dividend at the rate of Rs 3 per share.
Punjab National Bank’s [PNB] profits are ahead of our 10% growth expectations, but qualitatively, it remains a modest quarter. Margins continue to face pressures, cost increases are also relatively high and overall profitability has been supported by provisioning write-backs.
Falling margins and high costs pressure overall profitability; excluding trading gains, profit expansion is likely to be lower still. PNB’s well above industry and 400bp+ margins were always likely to erode; however, the erosion appears to be coming in a rate environment that should have bolstered PNB’s margins, given its balance-sheet structure. PNB is expected to report an EPS of Rs 60.08 below Dalal Street Analysts consensus of Rs 64.49. Stock price target is Rs 615.
Canara Bank 1Q08 profits up 26% yoy, 9% higher than our expectations. Qualitatively though, they fall short, with a drop in NIIs the primary and a large disappointment. Margins dipped almost 50bp; well below industry levels, its own historical lows, and in a quarter that saw little growth. The asset book itself provides comfort; limited asset deterioration over quarter, continuing asset recoveries, increase in coverage levels, and loan growth moderation to sub 20% levels.
Canara Bank is expected to report an EPS of Rs 35.86 for FY2008 and the stock price target is Rs 300.