DAILY MARKET OUTLOOK, 14TH OCT, 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 lower Tuesday, as investors weighed slight declines in oil prices and more indications of slowdown in China's economy, amid key third-quarter earnings reports.

Dow Jones	17081.9	-49.97	-0.29%
Dow Jones Fut	16971.0	-2.00	-0.01%
Hangseng	22530.3	-70.12	-0.31%
Nikkie	17871.5	-363.24	-1.99%
SGX Nifty	8115.5	-13.50	-0.17%

• Asian stocks dropped for a second day, tracking a decline in U.S. equities, as investors awaited Chinese inflation data amid renewed concern about the slowdown in the world’s second-largest economy.
• Market is expected to open on a flat note and likely to remain range bound during the day.
• Taro Pharmaceuticals, the US subsidiary Sun Pharmaceuticals, has acquired Canada's Zalicus Pharmaceuticals, a company engaged in the development of a pain management drug candidate coded Z944. 
• Info Edge (India) announced that it has transferred its entire shareholding in Etechaces Marketing and Consulting  to its wholly owned subsidiary MakeSense Technologies for a total consideration of Rs 101.3 cr 
• DB Realty Ltd said it will form a joint venture with Radius group to develop a housing project in Mumbai with an estimated sales revenue of Rs 3,500 crore 
• Indiabulls real estate looking to sell 40% in London Property – ET (eyes Rs 1000 cr from stake sale) 
• Era Infra Bags Order Worth Rs. 177.8 Cr For Rural Electrification From Govt
• Café Coffee Enterprises – IPO note – Issue Price band Rs 316-328: Café Coffee Enterprise Ltd is the parent company of the Coffee Day Group, which houses Café Coffee Day which has a network of 1,538 café outlets spread across 219 cities as of June 30, 2015. In terms of the number of chained cafe outlets, the company has a market share of approximately 46% in India, with their café footprint being nearly four times larger than the cumulative footprint of the next four competitors, as of December 31, 2014. In addition to their coffee business, the company also operates in other businesses namely, development of IT- ITES tech.

Coffee business, on a consolidated basis, has reported ~7.3% CAGR in revenue over FY2011-15 and ~7.8% CAGR in EBITDA over the same period. However, due to high depreciation and interest cost it makes loss at net profit levels.

It is raising Rs 1150 cr to partially repay the parent company’s (Rs 500 cr) and coffee business’s (Rs 125 cr) debt and balance amount would use for expanding the stores of “Café coffee day”.

Considering the loss at net level and holding company structure, we believe the issue is expensive and hence recommend “AVOID”

• Institution Desk - Swaraj Engines-BUY- Initiating Coverage- ‘H’igh ‘P’owered Growth!: Swaraj Engines caters to the 20HP-50HP engine requirement of fastest-growing Swaraj brand of tractors from Swaraj Tractors, which is owned by Mahindra & Mahindra or M&M. Swaraj Engines’ sales over the past several years outperformed as it supplies engines to Swaraj Tractors which has grown faster than the industry and nearly doubled its market share post acquisition by M&M in FY08. Swaraj Engines is expanding its product portfolio and has recently introduced a 54HP engine, while 60HP and 65HP engines along with diesel genset are in development mode. Also, Swaraj Tractors is likely to launch a new 60HP tractor in FY16, which coupled with new higher HP engines from Swaraj Engines, is likely to result in further industry-wide outperformance for Swaraj Engines over FY16-FY18E.

 

 

• Results announced

DCB Bank Ltd	Result inline NII came at 150cr vs exp 141 qoq 140 yoy 118cr PBP came at 78cr vs expv82 qoq 90 yoy 60cr. Qoq decline is on account of lower other income and higher exp Provision came at 21.7cr vs qoq 18 yiy 14cr PAT came at 37cr vs qoq 47 yoy 41cr Gross NPA came at 244cr vs qoq 206cr yoy 169cr
TCS (Insti)	SELL- 2QFY16 Result Update- P/E Premium Unsustainable After A Miss For The Fifth Time:Tata Consultancy Services’ (TCS) 2QFY16 performance was mixed. The 3.9% QoQ revenue growth in constant currency (CC) terms (3.0% in US dollar or USD reported terms) came in below our estimate (4.2%) and consensus estimate (>4.0%). This is the fifth consecutive quarter of TCS missing street estimate on revenue growth. With 2HFY16 indicated to show seasonal weakness in line with previous years (see our recent note 1H Seen Stronger Than 2H; Gains In TSP; Sub-contracting Charges Sticky, Re-badging not preferred), we expect consensus estimates to get downgraded for both FY16 and FY17. However, the 30% accretion to order book from the previous highest-ever level indicates better visibility going into the foreseeable future and would put a floor on revenue growth. We continue to factor in a high single-digit USD revenue growth over FY15-FY18E, which we believe is 300bps-500bps below street estimate. For 2QFY16, TCS displayed strong QoQ volume growth of 4.9% (implying a drop in realisation of 1.0%).
Sree Rayalaseema Alkalies	Result declined . Sales came at 182cr vs qoq 173cr yoy 201cr EBITDA came at 25cr vs qoq 29cr yoy 29cr PAT came at 6.5cr vs qoq 8.95cr yoy 5.84cr qtr EPS is Rs.0.82

 

• Results to be announced (PAT Rs cr)

 

13-Oct	Sept'14	June'15	Expectation
DIC India Ltd.	2.1	8.5	na
Goa Carbon Ltd.	-0.9	0.4	na
Hinduja Ventures Ltd.	26.0	23.9	26.5
Hindustan Unilever Ltd.	988.2	1059.1	1045.1
Network 18 Media & Investment Ltd.	-36.5	-1.2	na
TTK Prestige Ltd.	28.0	22.0	31.2
TV18 Broadcast Ltd.	43.2	0.0	na
Zee Entertainment Enterprises Ltd.	227.6	243.8	243.5