MARKET OUTLOOK 7TH 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 fell broadly ahead of Friday's critical employment report, as crashing media stocks weighed on the major indices for a second consecutive session amid speculation of a seismic shift in the delivery of entertainment programming.

Dow Jones	17419.8	-120.7	-0.69%
Dow Futures	17384.0	+9.0	+0.05%
Hangseng	24559.1	+183.9	+0.75%
Nikkie	20606.7	-57.7	-0.30%
SGX Nifty	8588.0	-25.5	-0.30%

 

• Asian shares got off on the back foot on Friday, on track for a weekly loss, following Wall Street lower as caution reigned ahead of U.S. employment data that may help determine whether the Federal Reserve could raise interest rates as early as next month.
• Market is expected to open on a flattish note and may see some profit booking during the day.
• Max India shareholders approve corporate restructuring plan
• Institution Desk - Bata India- ACCUMULATE- Key takeaways from AGM: We attended the Annual General Meeting (AGM) of Bata India (BIL) held in Kolkata on 5 August 2015. Sales from e-commerce business are expected to zoom from 0.2mn pairs in CY14 to 1.0mn pairs in CY15E. BIL has a 25-member team for e-commerce business. BIL has kept 500 telephone lines exclusively for e-commerce business so that it can offer aggressive discounts without impacting the retail channel. Average selling price (ASP) is higher in the online channel than traditional retail channel as a lot of low-value items get sold through the traditional retail channel. BIL is aiming at 5% of sales from the online channel in a couple of years. BIL is planning to set up 100 stores in FY16. BIL has announced stock split - from Rs10 face value currently to Rs5. 

 

• Results Announced

Bajaj Electricals	BUY - Turnaround In E&P Segment Drives Profitability, Retain Buy: Bajaj Electricals (BJE) posted 1QFY16 revenue of Rs10bn, up 14% YoY and in line with our/consensus estimates. Boosted by a sharp turnaround in engineering & projects (E&P) segment, EBITDA stood at Rs602mn, 18%/11% above our/consensus estimates, respectively, leading to an operating margin of 6%, up 180bps YoY and 80bps above our estimate of 5.2%. Driven by improved operating performance, PAT stood at Rs203mn, much above our/consensus estimates of Rs140mn/Rs168mn, respectively, despite a higher tax rate of 41% versus 33% in FY15. E&P segment posted second consecutive quarter of healthy margins at 5.8% (up 110bps QoQ) after reporting operating losses for 11 quarters.
Glaxo Consumer - Insti	Sell - Sales Growth Continues To Be Tepid: GlaxoSmithKline Consumer Healthcare’s (GSKCH) 1QFY16 sales were 4.3%/1.2% below our/Bloomberg consensus estimates, respectively, because of a weak operating environment and excise duty benefits going off. However, higher-than-expected margins led by lower raw material costs resulted in EBITDA and PAT being broadly in line with expectations. Poor volume growth and a weak economic environment will continue to lead to subdued EPS growth of 12%/15% in FY16E/FY17E, respectively.
Britannia - Insti	SELL - Near-term Outlook Good, But Valuation Is Stretched: While Britannia Industries’ (BIL) 1QFY16 consolidated sales were largely in line with our and consensus expectations, EBITDA and PAT were well above our and consensus estimates because of lower-than-expected A&P expenses and other expenses to sales. Changes to the model resulted in 10.6%/ 11.6% increase in our FY16/FY17 EPS estimates. Our estimates do not assume the risk of any marked increase in wheat or sugar prices in FY17. Britannia’s low gross margins make it inherently vulnerable to sharp rise in material cost. While we believe the management is taking the right steps, it is also likely that the costs on R&D and new launches will be front-ended.
SRF	Result is good Sales is Rs 1207.2 cr vs QoQ Rs 1065.3 cr YoY Rs 1147.2 cr EBITDA is Rs 266.6 cr vs QoQ Rs 189 cr YoY Rs 181 cr PAT is Rs 113 cr vs QoQ Rs 60.4 cr YoY Rs 92.5 cr The stock is trading at 20x on FY16E earnings
Nelcast	Result good Sales came at 142cr vs qoq 128cr yoy 132cr EBITDA came at 14.5cr vs qoq 10.5cr yoy 10.5cr PAT came at 7.13cr vs qoq 5.72cr yoy 4.11cr Qtr EPS Rs.0.82
Aarti Industries	Result is ahead of expectations Sales is Rs 666 cr vs exp of Rs 723.9 cr. QoQ Rs 667.5 cr YoY Rs 725 cr EBITDA is Rs 132 cr vs exp of Rs 131.6 cr. QoQ Rs 118.5 cr YoY Rs 113 cr PAT is Rs 61 cr vs exp of Rs 55 cr. QoQ Rs 52.8 cr YoY Rs 41.4 cr
Piramal Enterprises	Result improved
Polaris Consulting Services	result improved Sales came at 495.83cr vs qoq 467.66cr vs yoy 601.78cr EBITDA came at 63.78cr vs qoq 50.93cr vs yoy 51.06cr PAT came at 38.08cr vs qoq 37.09cr vs  yoy 38.32cr
Escorts	Result is Ahead of Expectation
Cummins	Result ahead of expectation
Trent Ltd	Result is good Sales is Rs 342 cr vs QoQ Rs 322 cr YoY Rs 315 cr EBITDA is Rs 31.5 cr vs QoQ loss of Rs 7.6 cr YoY Rs 18.8 cr PAT is Rs 16 cr vs QoQ Rs 11.4 cr YoY adjusted loss of Rs 9.1 cr
Bhartiya International	Result improved Sales came at 88.21cr vs yoy 73cr EBITDA came at 8.56cr vs yoy 6.09cr PAT came at 3cr vs yoy 2.50cr
Banco Product	result improved Sales came at 315cr vs yoy 319cr qoq 246cr EBITDA came at 44.7cr vs yoy 40.29cr qoq 2.35cr PAT came at 27.93cr vs yoy 24.19cr qoq loss of 2.59cr
Minda Corporation	result improved. Sales came at 522crvs qoq 474cr yoy 452cr EBITDA came at 47.2cr vs qoq 42.5cr yoy 41.6cr PAT came at 20.24cr vs qoq 26.41cr yoy 17.38cr
JMC Project	result improved. Sales came at 583cr vs yoy 601cr qoq 661cr EBITDA came at 45.4cr vs yoy 34.61cr qoq 53.24cr PAT came at Rs. 6.34cr vs yoy 4.29cr qoq 16.6cr
KEI ind	result improved sales came at 515cr vs qoq 630 yoy 390cr EBITDA came at 55cr vs qoq 55cr yoy 38cr PAT came at 11.7cr vs qoq 12.5cr yoy 3.55cr
Rupa & Company	result ok
Mangalore Chemicals & Fertilizers	Result is ok Sales is Rs 775 cr vs QoQ Rs 666.6 cr YoY Rs 431 cr EBITDA is Rs 21.2 cr QoQ Rs 77.8 cr YoY Rs 8.5 cr Adjusted net loss is Rs 6.8 cr vs QoQ profit of Rs 34.1 cr YoY loss of Rs 9.8 cr
Omaxe	result ok
Esab India	result ok
Borosil Glass Works	result ok
Control Print	result ok
Kesar Terminals	result ok
Oracle financial services software	result  ok Sales came at 1056  cr vs qoq 949.76cr vs yoy 1072cr EBITDA came at 473cr vs qoq 370cr vs yoy 485cr  PAT came at (adj)357cr vs qoq 230cr vs  yoy 394cr
Talwalkar Better Value	result inline Sales came at 50.70cr vs exp 50.23cr yoy 40cr EBITDA came at 22.38cr exp 23.15cr yoy 18.69cr PAT came at 4.77cr vs Exp 7.30cr yoy 4.03cr Lower PAT is on account of higher Depreciation
Timex Group	Result has declined Sales is Rs 38 cr vs QoQ Rs 31.8 cr YoY Rs 32.6 cr Loss at EBITDA level is Rs 3.5 cr vs QoQ profit of Rs 1.1 cr YoY loss of Rs 2.6 cr Net loss is Rs 4.7 cr vs QoQ loss of Rs 0.1 cr YoY loss of Rs 3.6 cr
Jaypee Infratech	result declining sales came at 513cr vs qoq 823cr yoy 705cr EBITDA came at 263cr vs qoq 332cr yoy 273cr PAT came at 26cr vs qoq 96cr yoy 46cr
Bomaby Dyeing	result continue to remain weak
Fortis Healthcare	Result is marginally below expectations Sales is Rs 1040 cr vs exp of Rs 1115.2 cr. QoQ Rs 1049.5 cr YoY Rs 1009.4 cr EBITDA is Rs 50.5 cr vs exp of Rs 54.5 cr. QoQ Rs 41.4 cr YoY Rs 24.8 cr Adjusted PAT is Rs 0.03 cr vs exp of Rs 4.5 cr. QoQ loss of Rs 17.5 cr YoY loss of Rs 45.8 cr
TD Power	Result continue to remain weak Sales came at 99.4cr vs Exo 95cr yoy 87.4cr qoq 187cr EBITDA came at negative 0.02cr vs Exp 3.38cr yoy negative 7.96cr qoq 1.65cr PAT came at negative 4.67cr vs Exp 0.43cr qoq 066cr yoy negative 9.24cr
Motherson Sumi	Result below expectation Sales came at 9252cr vs Exp 9364cr EBITDA came at 732cr vs Exp 871cr PAT came at 265cr vs Exp 302cr
Hawkins Cookers	Result declining
Arvind Mill - Insti	Operating Profit In Line, Huge Option Value Of Brand Portfolio: Excluding one-offs like a Rs75mn write-offs in Brands & Retail (B&R) division, restructuring expenses of Megamart etc, operating profit of Arvind for 1QFY16 was in line with our estimate of Rs2,384mncompared to reported Rs2,266mn, which was 5.0% below estimate. However, when high street expectations are taken into account, operating profit was down 11.8%. Following 34%/16.7%/13.7% growth in garment manufacturing/power brands/B&R division, respectively consolidated revenue grew 5.9% to Rs18,769mn. In a challenging environment, brands achieved SSG (same-store growth rate) of 6.6%. Core operating margin of textile/B&R division/power brands improved 40bps/50bps/60bps, respectively, but because of one-offs it was not visible in consolidated operating margin, down 51bps. As per Arvind, woven division, accounting for 39% of textile revenue will witness a ramp-up from 3QFY16. As discounts offered by leading brands in the e-commerce space have narrowed, unlike last year, revenue from B&R division is expected to post a healthy growth in the festive season. With the performance of GAP brand being above expectations, Arvind  will set up eight stores in FY16 compared to six planned earlier.
Tata Global Beverages	Result is below expectations Sales is Rs 2004 cr vs exp of Rs 1995.6 cr. QoQ Rs 1874.6 cr YoY Rs 1884 cr EBITDA is Rs 188 cr vs exp of Rs 201.2 cr. QoQ Rs 188.4 cr YoY Rs 201.3 cr PAT is Rs 82.3 cr vs exp of Rs 106.1 cr. QoQ adjusted profit was Rs 106.4 cr YoY adjusted profit Rs 94.5 cr The stock is trading at 19.9x on FY16E earnings
Linde India	result declining
Sundaram Brake	result continue to remain weak
Praj	Result below expectation. Sales came at 192cr vs exp 247cr yoy 221cr EBITDA came at 11.23cr vs Exp 16.27cr yoy 8.76cr EBITDA margin came at 5.83% vs Exp 6.6% yoy 4.0% PAT came at 5.30cr vs Exp 8.53cr yoy 2.49cr.

 

 

• Result to be Announced (Reported PAT Rs cr)

7/8/2015	Jun'14	Mar'15	Exp	NB Insti
Apar Industries Ltd.	20.1	9.2	17.3	18.2
Bharat Heavy Electricals Ltd.	193.5	888.4	230.1	152.7
Centum Electronics Ltd.	6.5	13.7	12.9	na
Corporation Bank	231.5	45.1	143.2	na
Cox & Kings (India) Ltd.	128.1	64.6	157.9	na
D-Link (India) Ltd.	5.8	5.3	na	na
Finolex Industries Ltd.	50.2	27.7	48.1	na
Future Retail Ltd.	66.5	10.3	30.2	na
Gateway Distriparks Ltd.	36.9	48.8	42.0	na
Grasim Industries Ltd.	487.1	506.7	490.4	na
Gujarat State Petronet Ltd.	85.0	67.1	101.9	na
Gulf Oil Corporation Ltd.	8.1	3.0	na	na
Indraprastha Medical Corporation Ltd.	8.4	7.6	8.5	na
Indian Toners & Developers Ltd.	1.8	2.2	na	na
Kalpataru Power Transmission Ltd.	41.9	40.1	42.9	na
Kirloskar Oil Engines Ltd.	47.3	26.4	49.4	na
Mahindra & Mahindra Ltd.	881.8	550.6	735.1	na
Mangalam Cement Ltd.	13.0	2.7	-3.6	na
Morepen Laboratories Ltd.	1.0	-3.7	na	na
MT Educare Ltd.	7.6	5.1	na	na
Indo-National Ltd.	6.0	3.3	na	na
Rural Electrification Corporation Ltd.	1282.8	1096.5	1388.0	na
Repco Home Finance Ltd.	24.8	39.0	31.1	na
Ramkrishna Forgings Ltd.	5.9	34.6	28.6	na
Sharda Motor Industries  Ltd.	7.2	10.6	na	na
Shilpa Medicare Ltd.	17.1	22.5	23.1	na
SML Isuzu Ltd.	23.4	12.7	na	na
Sunil Hitech Engineers Ltd.	9.0	12.2	11.1	na
Take Solutions Ltd.	13.0	27.1	26.8	na
Tata Motors Ltd.