MARKET OUTLOOK- 10TH APRIL, 2015

Dear Customer,

 

Markets always tend to be interesting with something or the other happening all the time. Our Morning Mantra is released before the opening bell and it includes the market commentary along with Corporate & Global news for the day.

 

• U.S. stocks closed higher on Thursday, with energy shares leading the advance as crude oil rebounded off a sharp decline, while investors bet that companies would top lowered expectations this earnings season.

Dow Jones	17958.7	+56.2	+0.31%
Dow Futures	17887.0	+58.0	+0.33%
Hangseng	26952.6	+8.2	+0.03%
Nikkie	19920.9	-16.9	-0.08%
SGX Nifty	8806.5	-2.5	-0.03%

 

• Asian stocks pared their second weekly advance as Japanese shares fluctuated around a 15-year high and investors considered the outlook for Hong Kong equities amid this week’s surge. Australia’s dollar gained with oil.
• Market is expected to open on flattish note but may see some profit booking during the day.
• Warburg Pincus sells 27% stake in Metropolis back to Shah family. Financial details of the deal were not yet disclosed.
• The telecom regulator slashed ceiling rates by 23% on calls and 75% on texts while roaming from May 1.
• IndiGo & Jet Airways have revised ticket cancellation penalties on passengers Raising prices in some cases by 50%-100%
• Fitch Affirms India At BBB-, Outlook Stable Raises FY16 Real GDP Growth To 8% & 8.3% For FY17
• Sarla Performance Bulk deal - Dinero Wealth Advisors Private Limited buy 58549 shares at Rs 410. Own Leasing Private Limited buy 70000 at Rs.410. Tata Trustee Company limited sell 150000 Rs.410.18
• 3 banks refuse to fund Adani Project of Adani Enterprises
• Biocon says insulin Glargine gets nod from Mexican Health Authority
• Sun Pharma Advanced Research Co (SPARC) will replace ING Vysya Bank in the S&P BSE 200 index from April 16.Balkrishna Industries will replace ING Vysya Bank in the BSE S&P 500 index.
• Apollo PE to sell 3% stake in Dish TV via block deal, price range is Rs 81-85/sh. Moneycontrol
• VRL Logistics – IPO Note: VRL logistic IPO looks good. They are in sub truck load B2B logistic. Not like Gati which is in express cargo B2C logistic. Company fundamentals are strong with consistent high operating cash flow and ROE of over 20%. In good time company revenue has grown at 25% in FY11 and FY12 it slowed down in FY14 and FY15 to around 14%. In FY16 we have considered 15% growth. We expect company to do Rs.14.3 EPS in FY16 and on diluted Equity share is offered at 14.4 times which looks very attractive. If the share trade at 18 PE than share price can be Rs.258. Considering the valuation of other logistic companies like snowman Gati etc it may even get higher multiple.Subscribe
• Information Technology – Sector Preview – Institution Desk: With the global information technology (IT) services industry growing in low single-digits in recent times and Indian IT services industry in low teens, there is a shift in market share currently in favour of India heritage players. Large West-based players (except for Accenture and to some extent CapGemini) have steadily lost share even in renewal contracts. Until a few years ago, in a contract renewal situation, the win rate (anecdotally) of an incumbent was possibly as high as 80%-90%. However, things seem to have changed quite dramatically over the past few years as some India heritage players, or even players like Accenture have started taking the share away from the West-based incumbents. The win rate of the disruptors has apparently gone up to as much as 30%-40% in case of contract renewals. We believe the competitive landscape has expanded significantly over the past five-seven years, with some weak West-based players getting marginalised while some strong India-based players have stepped up to the plate. With the convergence of capabilities, strategies and delivery models, we believe the larger set of vendors ensures a significantly better bargaining power for the customers, especially in a contract renewal situation.  We believe India-based players, who have become the disruptors in the contract renewal space, will be the incumbents of tomorrow and therefore need to continuously provide productivity improvement for their customers. This means sustained investments in solutions, automation, etc and a cap on pricing. Structurally speaking, not a happy situation for margins.

 

• Results Announced

Bajaj Corp	Result ahead of expectation. Sales came at 235.4cr vs exp 229cr EBITDA came at 74.1cr vs exp 68.5cr PAT came at 54.4 cr vs exp 53cr Share is trading at 29.5 PE FY16 earning
CMC	Result is ok Company is merging with TCS

 

• Result to be Announced (PAT Rs cr)

Companies	Mar’14	Dec’14	Mar’15 Exp
11th April
Indag Rubber Ltd	6.34	7.43	na

 

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