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 Wednesday as investors digested earnings reports and weighed weaker-than-expected data.
| Dow Jones |
16924.8
|
-157.14
|
-0.92%
|
| Dow Jones Fut |
16890.0
|
+68.00
|
+0.40%
|
| Hangseng |
22791.2
|
+351.28
|
+1.57%
|
| Nikkie |
18029.2
|
+138.21
|
+0.77%
|
| SGX Nifty |
8147.0
|
+20.50
|
+0.25%
|
- Asian stocks climbed, with the regional benchmark index heading for its first advance in three days, as technology and phone shares advanced.
- Market is expected to open on a flat note and likely to remain range bound during the day.
- Investigative agencies have traced the Rs 6,000-crore money laundering scam involving Bank of Baroda to 11 accounts of HDFC Bank.
- Virtusa a NASDAQ listed company is in final stage of talk with Polaris for acquisition for $350mn 20% premium to current market Cap of Polaris
- Financial Technologies India Ltd said it has completed the sale of 11% stake in Indian Energy Exchange to DCB Power Ventures and Kiran Vyapar
- JLR sales is showing sign of improvement in Sep Month. JLR sales was positive 3% yoy which is highest in last 5 months. In this Jaguar sales grew 22% yoy against 5% in aug, 14% of July, negative 6% in June, Land Rover sales declined 1% vs negative 5% in aug, Negative 7% in July and positive 1% in June. China Sales declined 29% in Sep vs negative 31% in Aug negative 37%in July and negative 46% in Jun.
- Institution Desk - Bata India- ACCUMULATE- Management Meet Update- We had a meeting with Mr. Ram Kumar Gupta, the new director-finance and chief financial officer (CFO) of Bata India (BIL) - who joined the company with effect from 19 August 2015 - to understand the change in strategy and the depth of its problems. Firstly, BIL is planning to consolidate to prepare itself for the long-term opportunity. Considering weak demand and internal problems, the management aims to increase BIL’s revenue by 50% in the next four years, a mere 10.7% CAGR. Following a lower growth rate and weak margin improvement because of higher opex, we have cut our FY16/FY17 net profit estimates sharply by 9.4%/14.4% to Rs1,887mn/Rs2,484mn, respectively. Our revised net profit estimates are 9.2%/7.6%below FY16/FY17 Bloomberg estimates, respectively.
- Institution Desk - V-Mart Retail: Subdued demand, delay in the festive season and a weak monsoon in Uttar Pradesh/Bihar may lead to a reduction in same-store growth or SSG rate to 4.0% in 2QFY16 from 8.6% in 1QFY16. Following weak demand and lower cotton/polyester prices, VRL has reduced the prices of its garments and therefore revenue growth is likely to be lower than volume growth. In addition, VRL had not set up any store in 1QFY16 but set up ~4 stores in 2QFY16. It is planning to open ~10 stores in October 2015 to capitalise on demand from the festival season. Following the back-ended nature of store opening, lower SSG and reduction in garment prices, we expect revenue growth to moderate in FY16 and FY17. We have cut our revenue estimates by 3.0%/6.2% to Rs8,607mn/Rs10,478mn for FY16/FY17, respectively. Customers are down-trading because of lower disposable income, while the benefit of lower cotton prices has been passed on to customers and therefore we expect gross margin to be under pressure. Consequently, we have cut our operating margin estimates by 50bps/39bps to 8.5%/8.9%, leading to 8.7%/15.1% reduction in our net profit estimates to Rs342mn/Rs451mn for FY16/FY17, respectively. Strong revenue/net profit growth of 21.7%/32.2%, respectively, expected in FY17 coupled with a debt-free status and a 239bps rise in RoCE to 17.3% in FY17E will lead to a strong re-rating. We have retained Buy rating on VRL with a revised target price of Rs652 (Rs768 earlier) based on 26.0x/12.5x FY17E P/E and EV/EBITDA, respectively.
- Institution Desk : Just Dial: The company finally launched its much-awaited Search Plus application, but it is ~33% complete as per Mr. V.S.S.Mani, the promoter. Just Dial or JDL will take another three months to complete the application, as per Mr. Mani. We conducted over 100 searches on JD application in categories like food delivery, table reservation, doctor appointment; reverse bidding, grocery delivery etc, and found out that JDL needs to significantly improve its eco system. We didn’t get a favourable response for over 50% of Search P:lus enquiries. Our interaction with various vendors indicated that margins in reverse bidding are very low and therefore vendors are not willing to provide price quotes for many categories, which dilutes user experience. We believe JDL is too late in most of the categories and Search Plus service will not take off meaningfully in the near future. Without Search Plus, growth in existing searches is expected to moderate in the long run. To factor in lower growth momentum, we have cut our target multiple from 35x to 27x FY17E EV/EBITDA. The stock price has declined 37% from its 52-week high of Rs1,707 on 21 October 2014 and factors in most of the negatives. At the current market price, JDL’s core business without Search Plus trades attractively at 31.0x/20.4x FY17E P/E and EV/EBITDA, respectively. We have retained Buy rating on JDL with a revised target price of Rs1,361 (Rs1,717 earlier).
- Institution Desk : JBF Industries: The company repaired its balance sheet by raising funds amounting to US$150mn from KKR Jupiter Investors in 2QFY16 with minimum equity dilution. JBF Industries (JBF) invested over US$400mn to set up a 390,000tn chip plant in Belgium and a 90,000tn film plant in Bahrain. Ramp-up of these plants is happening at an adequate pace. We expect its chip plant to reach optimum capacity utilisation in six months and its film plant to achieve optimum capacity utilisation in a year. With the rise in gas costs, profitability at existing RAK (UAE) plant is under pressure and therefore JBF has reduced utilisation level at RAK plant till its new ventures touch optimum utilisation, as manufacturing costs of chip plant in Belgium are lower than that of its RAK plant. JBF is investing over US$600mn to set up a 1.25mntn PTA plant, which is likely to be a game changer. Following the delay in arrival of key equipment, the plant is expected to commence operations in April 2016 from December 2015 earlier. This plant alone can generate EBITDA of ~Rs8bn compared to FY15 consolidated EBITDA of Rs8bn. Delay in PTA plant is expected to have a large impact on FY16/FY17 estimates. Therefore, we have cut our FY16/FY17 net profit estimates by 61.1%/37.1% to Rs1,484mn/Rs5,439mn, respectively. However, there is no change in our FY18 estimate. With improving balance sheet health and likely completion of PTA plant in six months, risk in JBF has reduced a lot and therefore we have increased our EV/EBITDA multiple to 6.0x from 5.0x/5.75x for its Indian/overseas operations. We have retained Buy rating on the stock with a revised target price of Rs336 (Rs517 earlier). Currently, the margins in chips/PoY and PTA are at lowest level and JBF has survived over three years of downturn in the industry. With multifold capacity expansion, JBF is likely to benefit the most at times of upturn in the film/PTA cycle. Against market capitalisation of Rs19bn, JBF is expected to generate annual free cash flow of over Rs7bn from FY18 onwards, thereby leading to a major re-rating.
- Institution Desk : India Gross Domestic Product (GDP)- Economy Update- Explaining The Deflator Conundrum: Since the release of India’s 1QFY16 gross domestic product (GDP) data, there have been doubts on the real growth numbers. Nevertheless, not much discussion has taken place on deflators, which represent one of the biggest anomalies. Until 4QFY15, GVA (gross value added) and GDP deflators used to be similar. However, not only these two deflators varied significantly in 1QFY16, they also moved in different directions from the Wholesale Price Index (WPI) which had been a credible leading indicator for them. A detailed analysis of GVA reveals that inconsistent behavior of three components discloses the anomaly in GVA deflator. Further, the divergence between GVA and GDP deflators is explained by the change in indirect tax rates, which is expected to continue in the coming quarters as well. Going forward, we hope that GVA deflator follows faster decline in WPI, implying that real GVA growth will outpace nominal GVA growth in 2QFY16.
- Results announced
|
|
|
|
|
|
|
|
|
|
|
|
- Results to be announced (PAT Rs cr)
15-Oct
|
Sept'14
|
June'15
|
Expectation
|
| Capital Trust Ltd. |
2.5
|
3.6
|
na
|
| CCL Products (India) Ltd. |
26.1
|
30.2
|
33.0
|
| Cyient Ltd. |
90.2
|
74.8
|
87.5
|
| Himatsingka Seide Ltd. |
23.5
|
40.8
|
39.1
|
| Karur Vysya Bank Ltd. |
90.5
|
134.6
|
132.3
|
| LIC Housing Finance Ltd. |
341.4
|
382.1
|
415.6
|
| The Lakshmi Vilas Bank Ltd. |
31.5
|
40.3
|
43.0
|
| Mastek Ltd. |
1.7
|
4.4
|
na
|
| Mindtree Ltd. |
137.4
|
138.2
|
152.2
|
| Sintex Industries Ltd. |
107.4
|
69.0
|
120.1
|
| V-Guard Industries Ltd. |
19.2
|
25.2
|
23.3
|
No comments:
Post a Comment