MARKET OUTLOOK- 3RD JULY 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 mildly lower on Friday, the final day of trade for July, as investors digested energy earnings misses and soft data that could push an initial rate hike further out. 

Dow Jones	17689.9	-56.1	-0.32%
Dow Futures	17611.0	-3.0	-0.02%
Hangseng	24437.7	-198.6	-0.81%
Nikkie	20485.6	-99.7	-0.48%
SGX Nifty	8563.5	-9.5	-0.11%

• Asia shares dropped Monday amid jitters about weakening Chinese manufacturing data and the continued declines in commodity prices.
• Market is expected to open on flattish note and likely to remain range bound during the day.
• Jet Fuel Prices Cut By 9.5% (Rs 4,860/kL) In Delhi
• Reliance Industries announced that Viacom Inc. has acquired a 50% interest in Prism TV for Rs 940 crore (approx. USD 153 million)
• JBF Industries- BUY- Event Update- Repairs Balance Sheet With Limited Equity Dilution: As per the outcome of JBF Industries’ (JBF) board meeting held on 31 July 2015, KKR Jupiter Investors will invest US$150mn in JBF, Rs4.9bn at the parent level for a 25% equity stake (pre-dilution) and Rs4.7bn  in JBF Global, the Singapore subsidiary, for a 17% stake. We believe JBF got a very good deal by raising Rs9.6bn, half of its current market capitalisation, through a mere 25% equity dilution at the parent level by structuring the deal in such a manner where it maximised the value of its subsidiary. KKR valued the Singapore arm alone at Rs27.8bn (Rs424/share) compared to consolidated market capitalisation of Rs19.7bn (Rs301/share). Following the high risk of elevated D/E ratio and execution risk of US$1bn capex, we had valued the consolidated entity at 4.6x FY17E EV/EBITDA and compared to this KKR valued the Singapore subsidiary at ~6.2x EV/EBITDA.
• The Hong Kong central bank has penalised State Bank of India's Hong Kong branch USD 1 million (Hong Kong dollar 7.5 million) for alleged violation of local anti-money laundering and counter-terror financing laws
• Petrol price was cut by Rs 2.43 per litre and diesel by Rs 3.60 a litre, the third reduction in rates this month.
• GSK Pharma halves price of its Seretide inhaler to take on Cipla
• SPARC gets complete response letter from US FDA for Latanoprost NDA
• PTC India Financial divests entire stake in Ind-Barath Energy (Utkal) for Rs 312 crore
• Automobile Sales July 2015- Monthly Sales Update- Car Sales Post Healthy Growth, Two-wheeler Sales Dismal:Automobile sales in July 2015 showed a mixed trend as major car OEMs (original equipment manufacturers) reported a healthy YoY growth in volume, while on the other hand major two-wheeler OEMs reported lower-than-expected sales. Car sales in India of major manufacturers grew on the back of new product launches. Market leader Maruti Suzuki India (MSIL) reported a 22.5% YoY improvement in domestic sales while Hyundai Motors and Honda Cars India posted 25% and 18% YoY sales growth, respectively.
• Banking Sector- Sector Update- Recapitalisation of PSU Banks: In a most awaited move, government has shown their intention of infusing capital of Rs250bn in FY16, far higher than the orginal budgetary allocation of Rs79bn. Budgetary allocation was clearly miniscule and far lower than market expectations. Many of the PSU Banks have Tier I ratio of ~7%, whereas the combination of bad and restructured loans is ~12%. So higher capital infusion definitely comes at a rescue especially for some of the smaller PSU Banks. Around 40% of the allocation will be given to those banks which need support to make bring back their capital to 7.5%. Second tranche of 40% will be allocated to six large PSU Banks viz State Bank of India, Bank of Baroda, Bank of India, Punjab National Bank, Canara Bank and IDBI Bank.

• Results Announced

ICICI - Insti	BUY- 1QFY16 Result Update-Performance In Line With Expectations: ICICI Bank’s overall 1QFY16 performance was in line with expectations. Net interest income (NII) grew 14% led by a 14.0% rise in credit off-take and a 14bps improvement in NIM (net interest margin) to 3.54%. Higher loan growth of 25% in the retail segment offsetting subdued growth of 9% in the corporate segment along with improvement in CASA (current account savings account) deposit ratio helped NIM expansion. The bank was able to improve its average CASA deposit ratio by 160bps YoY to 41.1%. Non-interest income growth was subdued at 5% because of lower fee income growth of 9% as well as lower treasury gains. Opex growth was contained at 9%, enabling an improvement of 63bps YoY in the cost-to-income ratio to 37.8%.
HCL Tech	Result below expectation. Though $ Sales came inline at 1537.5mn vs Exp 1536mn qoq 1490.5mn The Constant currency growth also came in line at 2.9% and Rupee revenue also inline at Rs.9777 vs Exp 9685cr But EBIT came lower at 1976cr vs Exp 2140cr mainly on account of higher employee cost. PAT came at 1783cr vs Exp 1821cr
Sun TV	Result Marginally ahead of Exp Sales came at 691cr vs Exp 685cr EBITDA came at 429cr vs Exp 387cr PAT came at 197cr vs Exp 190cr Share is trading at 12.7 PE FY17
Karur Vysya Bank	Result is marginally ahead of expectations NII stood at 423cr vs 399cr exp, 397cr qoq & 340cr yoy Non Interest Income at 162cr vs, 180cr qoq & 118cr yoy PBP at 296cr vs 257cr exp, 260cr qoq & 213cr yoy Prov at 118cr vs 195cr qoq & 86cr yoy PAT at 135cr vs 122cr exp, 138cr qoq & 122cr yoy Qrtrly EPS 11.04 GNPA  713 cr vs 677cr qoq at 1.91% vs 1.85% qoq NNPA 232 cr vs 281cr qoq at 0.88% vs 0.78% qoq
Elgi Equipment	result improved Sales came at 325 vs qoq 349cr yoy 321cr EBITDA came at 31cr vs qoq 23cr yoy 23cr PAT came at 13.7cr vs qoq 5.08cr yoy 12.95cr
Welspun Syntex	Result Improved
Dai Ichi Karkaria	Result Improved
Religare Enterprises	Result improved Income from operations 947cr vs 775cr yoy and 1047cr qoq PAT at 37.14cr vs .12cr yoy and 49cr qoq
Oriental carbon	Result improved
V2 Retail	result impoved
Gulshan Polyols	result good. Sales came at 102cr vs qoq 96cr yoy 85cr EBITDA came at 16.7cr vs qoq 13.6cr yoy 12.9cr Pat came at 8.64cr vs qoq 5.96cr yoy 5.80cr
Magma Fincorp	result operationally improved but Assets quality declined. NII came at 304cr vs qoq 306cr yoy 251cr PBP came at 144cr vs qoq 123cr yoy 101cr Provision increased to 87cr vs qoq 54cr yoy Pat came at 45cr vs qoq 52cr yoy 43cr
Savita Oil Technology	result impoved. Sales came at 388cr vs qoq 415cr yoy 485cr EBITDA came at 30.85cr vs qoq 12.69cr yoy 24.09cr PAT came at 11.87cr vs qoq 5.93cr yoy 6.31cr Qtr EPS Rs.8.13
Steel Strip- Wheel	result ok
Mazda	result ok
Seshasayee Paper	result ok
SPARC	result ok Sales came at 43.44cr vs qoq 42.7cr yoy 35.9cr EBITDA came at 0.01cr vs qoq negative 8cr yoy negative 9.5cr EBITDA improvement is on account of lower clinical trial exp PAT came at negative 1.65cr vs qoq negative 9.4cr yoy negative 9.7cr
Sarla Performance	result ok. Sales came at 80cr vs qoq 78cr yoy 82cr EBITDA came at 17.2cr  vs qoq 15.07cr yoy 12.3cr PAT came at 10.01cr vs qoq 11.24cr yoy 6.33cr Qtr EPS is Rs. 12.03
Shopper Stop	Result inline Sales came at 697cr vs Exp 710cr yoy 602cr EBITDA came at 33cr vs Exp 38cr yoy 31cr PAT came at 4cr vs Exp 3 cr yoy 0.75cr
Munjal Showa	Result ok Sales came at 391cr vs qoq 398cr yoy 436cr + EBITDA came at 32cr vs qoq 35cr yoy 32cr PAT Came at 18cr vs qoq 21cr yoy 19cr
Phillips Carbon	Result ok Sales came at 477cr vs 591cr yoy 609cr EBITDA came at 41cr vs qoq 36cr yoy 47cr PAT came at 2cr vs qoq 0.47cr yoy 1.05cr
Nath Bio Gene	Result is ok
Shriram Transport	result – in line with expectations NII stood at 1158cr vs 1100cr exp, 1126cr qoq & 1132cr yoy  PBP at 861cr vs 815cr exp, 816cr qoq & 767cr yoy Prov at 382cr vs 339cr qoq & 324cr yoy PAT at 321cr vs 329cr exp, 317cr qoq & 306cr yoy
AIA Engineering	result inline Sales came at 516cr vs Exp 544oy 474cr qoq 587cr EBITDA came at 146cr vs Exp 140cr yoy 127cr qoq 157cr Pat came at 103cr vs Exp- 97cr yoy 95cr qoq 113cr
Fiem Ind	Result ok
Cholamandalam	result – in line with expectations NII stood at 492cr vs 469cr exp, 456cr qoq & 319cr yoy  PBP at 279cr vs 276cr exp, 263cr qoq & 224cr yoy Prov at c107r vs 58cr qoq & 81cr yoy PAT at 111cr vs 124cr exp, 137cr qoq & 96cr yoy
EPC Industries	result ok
L&T	result below expectation Sales came at 20460cr vs Exp 20295cr yoy18974cr EBITDA came at 2290cr vs Exp 2430cr yoy 2515cr PAt came at 626cr vs Exp 854cr Order booking came at 26400cr vs Exp 2900cr but company maintained 15% growth in fresh order booking guidance for year.
Raymond	result inline. Sales came at 1108cr vs Exp- 1221cr yoy 1096cr EBITDA came at 48cr vs Exp- 49cr yoy 39cr PAT came at negative 14cr vs Exp- negative 10cr yoy negative 32cr
Rane (Madras)	result ok
Glaxo Pharma	Result is below expectations Sales is Rs 628 cr vs exp of Rs687 cr. QoQ Rs 613.5 cr YoY Rs 655 cr EBITDA is rs 110 cr vs exp of Rs 144 cr. QoQ Rs 126 cr YoY Rs 114 cr PAT is Rs 93.3 cr vs exp of Rs 124.3 cr. QoQ Rs 103 cr YoY rs 98 cr
Sundaram Finance (standalone)	Result marginally below expectations NII stood at 266cr vs 276cr qoq & 264cr yoy PBT at 161cr vs 171cr qoq & 191cr yoy PAT at 99cr vs 91cr qoq & 122cr yoy
Alembic Pharma	Result is below expectations Sales is Rs 582.4 cr vs exp of Rs 615 cr. QoQ Rs 502 cr YoY Rs 494 cr EBITDA is rs 102 cr vs exp of Rs 149 cr. QoQ Rs 98 cr YoY Rs 97 cr PAT is Rs 70 cr vs exp of Rs 100 cr. QoQ Rs 70 cr YoY rs 64 cr
CESE	Result marginally below expectations Sales came at 1689cdr vs exp 1759cr EBITDA cmae at 386cr vs Exp 394cr PAT came at 152cr vs Exp 167cr
Titan	Result is below expectations Sales is Rs 2686.7 cr vs exp of Rs 2916 cr. QoQ Rs 2474 cr YoY Rs 2854 cr EBITDA is rs 223 cr vs exp of Rs 281.5 cr. QoQ Rs 270 cr YoY Rs 274 cr PAT is Rs 151 cr vs exp of Rs 191 cr. QoQ Rs 215 cr YoY rs 177 cr
Onmobile	Result declined Revenue came at 202cr vs qpq 214cr yoy 184cr (adj) EBITDA came at 35cr vs qoq 45cr ( adj to Fx loss) and yoy 15.6cr Margin declined to 17.4% vs qoq 21% yoy 7.9% qoq decline in margin is on account of 200 bps on account of new product launch and development and balance must be on account of shift of Lt America contract. PAT came at negatve 0.16 cr vs qoq negative 15cr yoy negative 24cr Free cash flow generation is Rs.23 cr and net cash Balance with company is 250cr. Since company is renovating its business and Lt America contact is renewed with no upfront payment and lower margin it may see some up and down in qtr result in FY16. We may see some correction on account of this number but long term outlook is positive.
Den network	result continue to remain weak
JK Cement	result below expectation Sales came at 811cr vs Exp 876cr EBITDA came at 87.4cr vs Exp 119.09cr PAt came at 0.16cr vs Exp 23.8cr
Godfrey Phillips	Result is declining Sales is Rs 588 cr vs QoQ Rs 763 cr YoY Rs 683 cr EBITDA is rs 106 cr vs QoQ Rs 117 cr YoY Rs 144 cr PAT is Rs 53.8 cr vs QoQ Rs 60 cr YoY rs 80 cr
Uttam Galva Steel Ltd	Result is Weak Sales is Rs 1708.7 cr vs QoQ Rs 2047.8 cr YoY Rs 1614.1 cr EBITDA is Rs 146.3 cr vs QoQ Rs 123 cr YoY Rs 153.8 cr PAT is Rs 1.9 cr vs QoQ Rs 9.6 cr YoY rs 9.5 cr

• Result to be Announced (Reported PAT Rs cr)  

3/8/2015	Jun'14	Mar'15	Exp	NB Insti
Aban Offshore Ltd.	152.7	113.5	157.2	na
Adlabs Entertainment Ltd.	0.0	-31.2	na	na
Atul Auto Ltd.	9.7	8.6	8.2	na
Berger Paints India Ltd.	57.5	58.1	72.9	na
BGR Energy Systems Ltd.	9.2	18.8	7.2	na
Bharat Forge Ltd.	145.0	203.2	195.0	na
Carborundum Universal Ltd.	27.4	66.1	36.6	na
Forbes  & Company Ltd.	0.8	10.3	na	na
Firstsource Solutions Ltd.	53.2	62.3	61.6	na
Hero MotoCorp Ltd.	562.8	476.5	677.3	707.4
Hitech Plast Ltd.	2.0	0.2	na	na
Indiabulls Real Estate Ltd.	38.9	93.1	79.7	na
Indiabulls Wholesale Services Ltd.	10.4	2.4	na	na
JK Paper Ltd.	-22.5	18.1	na	na
Mcleod Russel India Ltd.	-32.0	-208.0	-7.7	na
Mold-Tek Technologies Ltd.	1.4	0.9	na	na
Monsanto India Ltd.	71.0	-8.3	73.4	na
Nilkamal Ltd.	5.5	21.7	12.4	na
Redington (India) Ltd.	76.9	122.6	97.5	na
Styrolution ABS (India) Ltd.	5.2	9.2	na	na
Talbros Engineering Ltd.	0.0	1.3	na	na
Tasty Bite Eatables Ltd.	2.6	3.2	3.0	na
Thirumalai Chemicals Ltd.	-0.7	-2.7	na	na
Tamil Nadu Newsprint & Papers Ltd.	26.2	69.3	47.6	na
United Bank of India	65.9	104.5	na	na
V-Guard Industries Ltd.	22.3	20.1	24.4	26.4