MARKET OUTLOOK 6TH AUG. 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 mostly higher Wednesday, though the Dow industrials were unable to shake off a weak performance by Disney and energy shares, in a choppy day of trading Wednesday as investors digested conflicting U.S. economic data. 

Dow Jones	17540.5	-10.2	-0.06%
Dow Futures	17459.0	-16.0	-0.09%
Hangseng	24370.1	-144.1	-0.59%
Nikkie	20774.9	+160.8	+0.78%
SGX Nifty	8578.0	-15.0	-0.17%

• Asian stocks advanced, tracking a rebound in the US as optimism over the American economy supported the US dollar and copper rallied. Mounting bets the Federal Reserve will boost interest rates as soon as next month hit bonds, while oil was near a four-month low amid concern over supply.
• Market is expected to open on a flattish note and may see some profit booking during the day.
• The Employees’ Provident Fund Organisation (EPFO) will enter the stock markets today.
• STAR India, which held nearly 26% stake in Balaji Telefilms, has offloaded all its shares in the company at Rs 63.6 a share. The total deal value is pegged at Rs 108 crore.
• Maruti Suzuki launched a diesel-powered S-Cross, priced between Rs 8.34 lakh and Rs 13.74 lakh (ex-showroom, Delhi) to expand its premium range and populate Nexa, the recently launched premium dealerships
• Infosys is increasing investments to strengthen banking software Finacle's footprint in the US, spending more on marketing brands and building new sets of products and solutions. It aims to generate $2 billion of annual revenue from products and new services by 2020.
• Tata Steel said talks with Switzerland-based Klesch Group for sale of its long products Europe business have been discontinued.
• Institution Desk – Cognizant Ltd – Not Rated - Pulling Away From India-listed Pack As Investments In Digital Pay Off: In a repeat of 1QCY15 show and unlike the performance of its India-listed Tier-1 peers, Cognizant (CTS) reported a strong 2QCY15 and raised its guidance on both revenue and earnings for CY15 for a second time, despite dropping US$100mn business from a client called Health net. The 6% QoQ revenue growth was underpinned by an 8% growth in its consulting division while outsourcing (where business is akin to India-listed peers) grew just 3%. Consulting to outsourcing split was 57:43. Interestingly, Cognizant stated that in many deals (likely digital) in recent times, it is not competing with India-listed players but with global MNC players. We reiterate that Cognizant’s performance is market share gain-driven rather than a reflection of offshore information technology (IT) services demand. The strongest performer in India Tier-1 set has been Infosys, at 4.4%, in the comparable quarter. The market share gain of CTS is because of ahead-of-the-curve investments it has been making consistently in: (1) Building strong capabilities in digital business, (2) Sales and marketing, (3) Industry expertise and industry platforms, (4) Consulting capabilities, and (5) Plugging capability gaps through tuck-in acquisitions. The relatively lower exposure to (1) ‘Traditional services’, (2) The troubled energy and telecom verticals, and (3) Relatively larger exposure to robust healthcare and life sciences (HCLS) vertical also helped. We believe it is also a beneficiary of the ongoing vendor consolidation exercise in the IT industry as it seems to have strong capabilities in both ‘what to do’ and ‘how to do’ parts of the digital opportunity, while India-listed peers are likely stronger in the latter. The strong performance of CTS does not change our cautious view on the sector. We believe Indian IT services industry is likely to witness high single-digit US dollar revenue growth with downside risks over FY15-FY18E, as expounded in our IT sector initiating coverage report ‘Structural And Cyclical Speed-breakers Ahead. While consensus estimates on revenues for India-listed players have been reset downwards for FY16 over the past few quarters, we believe they are fairly elevated for FY17. We expect downward revisions to FY17 consensus numbers in the coming days, exerting pressure on stock performance. We have no Buy rating for stocks in our coverage universe currently. We have Accumulate rating on Infosys/HCL Technologies and Sell rating on Tata Consultancy Services/Wipro/Tech Mahindra.

• Results Announced

Bata India - Insti	ACCUMULATE- 1QFY16 Result Update- Weak Gross Margin; Downgrade To Accumulate: Bata India’s (BIL) net revenue for 1QFY16 rose 9.4% to Rs6,805mn, 1.3%/2.6% above our/Bloomberg estimates, respectively. Inventory increased by 20.9% against a 4.4% revenue growth in FY15. To liquidate inventory, increase in footfalls/conversion that had declined because of to SAP implementation/e-commerce impact, BIL ran various promotional schemes and increased price discounts which reduced gross margin by 364bps to 48.4%, below our estimate of 53.7% and posted a 293bps decline in EBITDA margin to 12.7%, much below our/Bloomberg estimates of 16.6%/15.3%, respectively. Consequently, EBITDA/APAT declined 11.1%/18.6%, respectively, much below expectations. Post recent run-up in stock price, at 27.3x FY17E P/E the risk-reward ratio is not favourable considering lack of clarity on critical matters like installation of SAP/ERP systems, ramp-up in e-commerce business, steps taken to improve product quality etc. Therefore, we have downgraded the stock to Accumulate (from Buy earlier). BIL has brought back Mr. Nitesh Kumar as managing director - retail in May 2014, and Mr. Shaibal Sinha as an additional director from May 2015, both of whom turned around BIL at the time of Mr.Marcelo Villagran’s regime in the past. Mr.Villagran and Mr. Sinha had turned around BIL then. We will closely monitor the progress in developments done by the new team to address our key concerns. We have retained our estimates and target price of Rs1,355 on BIL based on 30x/17.3x FY17E P/E and EV/EBITDA, respectively.
Glaxo Consumer	Result is good Sales is Rs  990 cr vs exp of Rs 1159.3 cr. QoQ Rs 1165 cr YoY Rs 921.6 cr EBITDA is Rs 199 cr vs exp of Rs 141.4 cr. QoQ Rs 263.8 cr YoY Rs 164.6 cr PAT is Rs 155 cr vs exp of Rs 122.9 cr. QoQ Rs 196.8 cr YoY Rs 130.1 cr The stock is trading 38x on FY16E earnings
Uflex	Result is good Sales is Rs  1370 cr vs QoQ Rs 1444.7 cr YoY Rs 1495.6 cr EBITDA is Rs 215 cr vs QoQ Rs 158.9 cr YoY Rs 189 cr PAT is Rs 75.6 cr vs QoQ Rs 68.5 cr YoY Rs 64.0 cr
Siemens - Insti	SELL- 3QFY15 Result Update- Profitability Improves, But Order Book Remains Weak: Siemens posted 3QFY15 revenue of Rs23.8bn, 9%/3% below our/consensus estimates, respectively. Top-line was flat on YoY basis, but excluding the discontinued metals technology business, it grew 8% YoY. Driven by a 680bps YoY decline in raw material costs as a percentage of sales, EBITDA stood at Rs2.5bn, 14%/16% above our/consensus estimates, respectively. Operating margin was strong at 10.7% for the quarter. However, it must be noted that Siemens has a very high quarterly variation in profitability because of uneven booking of revision in project costs and provisioning. Aided by higher other income of Rs555mn, PAT stood at Rs1.7bn, 32%/30% above our/consensus estimates, respectively. Order book remains suppressed, leading to muted book-to-bill ratio. Factoring in better profitability and higher other income, our FY15E earnings stand revised upwards by 17%. Even though we have revised upwards our operating margin estimates for FY16/FY17 by 100bps each to 9.8%/10.5%, respectively, muted order book led to reduction in our revenue estimates by 15%/16%, thereby resulting in 5%/7% cut in our earnings estimates, respectively, for the same period.
Marico	Result is good Sales is Rs  1781.5 cr vs exp of Rs 1817.7 cr. QoQ Rs 1223 cr YoY Rs 1619.2 cr EBITDA is Rs 325 cr vs exp of Rs 314.8 cr. QoQ Rs 171.3 cr YoY Rs 266.6 cr Higher other income boosted PAT PAT is Rs 238 cr vs exp of Rs 217.5 cr. QoQ Rs 110 cr YoY Rs 185.3 cr The stock is trading 41x on FY16E earnings
Emami	Result ahead of Expectation Sales came at 590cr vs exp 569cr yoy 482cr qoq 553cr EBITDA came at 99.7cr vs exp 92.8 yoy 75cr qoq Rs.140cr PAT came at 88cr vs Exp 82.4cr qoq 138cr yoy 70.8cr
R Systems	Result improved Sales came at 165cr vs qoq151cr yoy 161cr EBITDA came at 25cr qoq 17cr yoy 23cr PAt came at 14.35cr vs qoq 8.20cr yoy 13.93cr
Asahi India Glass	Result improved Sales came at 533cr vs qoq 525cr yoy 526cr EBITDA came at 106cr vs qoq 93cr yoy 70cr PAT Came at 20.6 vs qoq 18.68cr yoy loss of 4.10cr
Shree Cements	Result ahead of Expectation Sales came at 1720cr vs Exp 1635cr EBITDA came at 357cr vs exp 312 PAT came at 104cr vs Exp 73
Pricol Ltd	Result improved qoq Sales came at 217cr vs qoq 217cr yoy 218cr EBITDA came at 12cr vs qoq negative 8cr yoy 19cr PAT came at 12cr vs qoq negative 2.4cr yoy 6cr
Nandan Denim	Result is Good Sales is Rs  280.5 cr vs exp of Rs 291.1 cr. QoQ Rs 278.3 cr YoY Rs 263.7 cr EBITDA is Rs 45.2 cr vs exp of Rs 43.8 cr. QoQ Rs 37.5 cr YoY Rs 40.3 cr PAT is Rs 15.5 cr vs exp of Rs 14.6 cr. QoQ Rs 15.3 cr YoY Rs 11.5 cr
Safari Ind	result improved
Manali Petro	result improved sales came at 170cr vs qoq 196cr yoy 162cr EBITDA came at 22cr vs qoq 13.5cr yoy 13.3cr PAT came at 14.7cr vs qoq 8.9cr yoy 6.86cr Qtr EPS Rs.0.86
IGL	result marginally ahead of expectation. Sales came at 899cr vs Exp 932cr EBITDA came at 196cr vs exp 188cr PAT came at 102cr vs Exp 104cr
Prism Cement	result ahead of exp Sales came at 1369cr vs Exp 1421cr EBITDA came at 81cr vs exp 74cr PAt came negative 8cr vs Exp  negative 16cr
ITD Cementation	result good
FDC	Result good Sales came at 258cr vs qoq 215cr yoy 217cr EBITDA came at 60cr vs qoq 40cr yoy 43cr PAT came at 44cr vs qoq 34cr yoy 34cr Qtr EPS is Rs.2.46
PTC India	result ahead of expectation sales came at 3293cr vs exp 3757cr EBITDA came at 58cr vs exp 51cr PAT came at 48cr vs exp 43cr
Ramco Industries	result improved
Samkrg Pistons & Ring	result improved
Tree House Education	result improved
Insecticides India	Result is in-line Sales is Rs  285.4 cr vs exp of Rs 276.1 cr. QoQ Rs 160.8 cr YoY Rs 252.4 cr EBITDA is Rs 35 cr vs exp of Rs 38.3 cr. QoQ Rs 13.5 cr YoY Rs 33.9 cr PAT is Rs 19.8 cr vs exp of Rs 20.3 cr. QoQ Rs 6.2 cr YoY Rs 17.4 cr The stock is trading 13.6x on FY16E earnings
J B Chemicals	Result is in-line Sales is Rs  279 cr vs exp of Rs 283.1 cr. QoQ Rs 249.8 cr YoY Rs 256.7 cr EBITDA is Rs 459.5 cr vs exp of Rs 50 cr. QoQ Rs 42.6 cr YoY Rs 47.9 cr PAT is Rs 34.3 cr vs exp of Rs 31 cr. QoQ Rs 25.7 cr YoY Rs 31.8 cr The stock is trading 18x on FY16E earnings
Deepak Fertilizers	result ok  Sales came at 1065cr vs qoq 923cr yoy 939cr EBITDA came at 93cr vs qoq 81cr yoy 105cr PAT came higher on account of higher other income at 45cr vs qoq 27cr yoy 40cr
Sonata Software	result ok Higher PST is on account of Exceptional Gain and Forex gain
Anjani Portland Cement	Result is inline Sales is 87.7cr vs QoQ Rs 82 cr YoY Rs 49.5cr EBITDA is Rs 22.9cr vs QoQ Rs 21.9 cr YoY Rs 0.4 cr PAT is Rs 6.7 cr vs QoQ Rs 15.8 cr. YoY loss of Rs 9.7 cr
Vardhman Textile	Result inline Sales came at 1386cr vs Exp 1480 qoq 1407cr yoy 3803cr EBITDA came at 294cr vs exp 282cr qoq 299cr yoy 283cr PAt came higher at Rs.148cr vs Exp 104cr qoq 90cr yoy 106cr on account of lower depreciation and higher other income
The Ramco Cement	Result inline Sales is Rs 952.8 cr vs  QoQ Rs 962 cr YoY Rs 927.7cr EBITDA is Rs 252.2cr vs  QoQ Rs 274.5 cr YoY Rs 172.6 cr PAT is Rs 94.7 cr vs  QoQ Rs 94.4 cr. YoY Rs 35.5 cr
Accelya Kale	Result flat Sales came at 75cr vs qoq 76 yoy 73cr EBITDA came at 27.6cr vs qo 29.7 yoy 28.6cr PAT came at 14cr vs qoq 18cr yoy 18cr
Camline Fine	result ok sales declined but margin improved. Sales came at 122cr vs qoq 170cr yoy 133cr EBITDA came at 29cr vs qoq 15cr yoy 21cr PAT came at 14cr vs qoq 22 ( Tax w/ back) yoy 14cr
Ramco System	result ok Sales remain flat qoq but margin improved. Sales came at 103cr vs qoq 101cr yoy 77cr EBITDA came at 22.4cr vs qoq 19cr yoy 12cr PAT came at 7cr vs qoq 4.34cr yoy negative 2.9cr
Ashapura Mine Chem	result improved. Sales came at 418cr vs qoq 441cr yoy 420cr EBITDA came at 69cr vs qoq 36cr yoy 83cr PAT came at 52cr vs qoq 1.22cr yoy 65.40cr
Snowman Logistic	result marginally declined qoq Sales came at 59.2cr vs qoq 53.84cr EBITDA came at 12.42cr vs qoq 13.97cr PAt came at 5.52 cr vs qoq 14.25cr last qtr profit was higher on account of tax reversal. Qtr EPS Rs.0.33
Tata Chemicals	Result below exp Sales is Rs  4015 cr vs exp of Rs 4097.6 cr. QoQ Rs 3657.9 cr YoY Rs 3803.4 cr EBITDA is Rs 491 cr vs exp of Rs 584.6 cr. QoQ Rs 411.1 cr YoY Rs 503.6 cr PAT is Rs 153 cr vs exp of Rs 224.4 cr. QoQ adjusted Rs 123.7 cr YoY Rs 175.5 cr The stock is trading 12.7x on FY16E earnings
Automotive Axel	result improved
Maharastra Seamless	result not good
NDTV	Result not good. Sales came at 120cr vs qoq 161cr yoy 142cr EBITDA came at negative 20cr vs qoq 18cr yoy 6cr PAt came at negative 24cr vs qoq negative 17cr yoy negative 2cr
Sharda Crop Chem	result declining Sales came at 279cr vs yoy 270cr EBITDA came at 51cr vs yoy 61cr PAT came at 36cr vs yoy 43cr
Jindal Drilling	Result declining
Mercator Ltd	result continue to remain weak
Brigade Enterprise	result ok
Bombay Murmah Trading	result ok
Morarjee Textiles	Result ok

• Result to be Announced (Reported PAT Rs cr)

6/8/2015	Jun'14	Mar'15	Exp	NB Insti
Aarti Industries Ltd.	41.4	52.8	55.1	na
Arvind Ltd.	90.5	48.2	94.4	73.3
Bajaj Electricals Ltd.	5.6	46.9	19.4	14
Banco Products (India) Ltd.	24.2	-2.6	na	na
Bhartiya International Ltd.	2.5	2.2	na	na
Bombay Dyeing	-53.6	178.6	-68.7	na
Claris Lifesciences Ltd.	15.5	10.4	15.6	na
Cummins India Ltd.	212.0	190.4	176.3	na
Esab India Ltd.	6.5	-1.4	na	na
Escorts Ltd.	34.1	12.8	22.2	na
Fortis Healthcare Ltd.	-45.8	-17.5	4.5	na
Garware Polyester Ltd.	7.9	4.8	na	na
Hawkins Cookers Ltd.	7.1	9.7	na	na
Indian Card Clothing Company Ltd.	-2.9	0.9	na	na
JMC Projects (India) Ltd.	4.3	16.6	5.7	na
Jaypee Infratech Ltd.	46.0	96.3	66.1	na
Jaiprakash Power Ventures Ltd.	69.2	-141.5	-103.6	na
KEI Industries Ltd.	3.5	12.5	10.7	na
Kesar Terminals & Infrastructure Ltd.	3.8	2.5	3.7	na
Mangalore Chemicals & Fertilizers Ltd.	-9.8	34.1	na	na
Monte Carlo Fashions Ltd.	0.0	2.8	na	na
Motherson Sumi Systems Ltd.	163.7	340.1	316.3	na
Oracle Financial Services Software Ltd.	394.4	230.4	320.8	na
Piramal Enterprises Ltd.	2896.3	95.4	na	na
Polaris Consulting & Services Ltd.	38.3	<