Indian stock market and companies daily report (January 05, 2012, Thursday)

Indian markets are expected to open lower following negative cues from the European markets and the Asian markets. Asian stocks are trading in the red after Italy’s biggest bank said it needs to raise more capital, spurring concern that the European debt crisis is worsening.

Indian shares ended a choppy session modestly lower on Wednesday, with key benchmarks indices losing less than half a percent each, as investors took some profits after a two-day rally.

European shares snapped a four-day streak of gains on Wednesday as UniCredit SpA’s plan to sell shares fueled concern that banks need to raise capital to weather the debt crisis. US market traded lower in the first half due to profit taking, with some traders cashing in on Tuesday's strong gains amid lingering concerns about the European debt crisis and the outlook for the global economy. The downward momentum was partly offset by the release of a report from the Commerce Department showing a rebound in new orders for U.S. manufactured goods, leading to US markets ending marginally in the green.

Markets Today

The trend deciding level for the day is 15,903/4,754 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 15,984 - 16,086/4,779 - 4,808 levels. However, if NIFTY trades below 15,903/4,754 levels for the first half-an-hour of trade then it may correct up to 15,802 - 15,721/4,725 - 4,700 levels.

Cement Dispatches – December 2011

UltraTech reported cement dispatches for December 2011, which were up by strong 10.6% yoy to 3.62mn tonnes. However, for 3QFY2012, growth in dispatches has been modest at 5.9%. In December 2011, the company managed to post better growth in dispatches compared to Ambuja Cements' growth, which reported modest growth of 5.7% yoy. We continue to remain Neutral on UltraTech.

KEC International secures orders worth Rs.1,253cr

KEC International (KEC) has bagged orders totaling Rs.1,253cr across various business verticals. In the transmission and distribution space (T&D), the company secured orders worth Rs.976cr. Order intake in MENA region stood at Rs.414cr (Rs.310cr and Rs.104cr worth of orders from Saudi Arabia and Afghanistan, respectively). SAE Towers secured orders worth Rs.154cr. In addition, Rs.350cr worth of orders came from the U.S., Kenya and Philippines. Notably, only one order came from the domestic T&D space (Rs.59cr), thus demonstrating the company’s globally diversified strength. The completion time of all these orders ranges from 12-27 months. In addition to the above, the company bagged orders in the business verticals of water (Rs.123cr), cables (Rs.105cr) and telecom (Rs.49cr). The current order book of the company stands at Rs.9,000cr.

KEC’s globally diversified model has enabled it to gain an edge over its domestic peers in the T&D space. While domestic players have struggled to secure orders amid the slowdown, KEC has consistently maintained its average quarterly run rate of Rs.1,200 since the past several quarters. In addition, new businesses of water, railway and telecom are faring well (pace of new orders is gradually increasing). Hence, given the latent potential of the company and healthy return ratios (25%), the valuations of 4.3x FY2013E EPS (well below its historic PE multiple average of 14.0x) are compelling. We recommend Buy with a target price of Rs.45.

Economic and Political News
- Government defers decision on PSU disinvestment via buyback-
- Finance Ministry rules out floating rates in postal savings
- Global food prices expected to remain high: FAO

Corporate News
- ONGC finds four more potential reserves
- Bosch to invest Rs.3,000cr in India on expanding capacity
- Hero MotoCorp unveils three new products at Auto Expo, New Delhi
- TCS adds 200 clients on its SME platform iON
- Dhanlaxmi Bank raises NRE term deposit rates

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Indian stock market and companies daily report (January 04, 2012, Wednesday)

Indian markets are expected to open in the green following positive cues from the European markets and the Asian markets. Asian stocks trading in the green after U.S. manufacturing increased at the fastest pace in six months. Indian shares rallied on Tuesday as inflation worries seem to be abating and the Reserve Bank of India said it might ease monetary policy to address concerns about economic growth.
The US markets ended in the green as markets benefited from positive reactions to the latest batch of economic data. The early rally on Wall Street was partly due to the release of a report showing a modest rebound in Chinese manufacturing activity in the month of December. A separate report showing a notable drop in German unemployment also generated some buying interest. Stocks saw continued strength following the release of a report from the Institute for Supply Management showing that its index of activity in the U.S. manufacturing sector rose to a six-month high in December.

Markets Today
The trend deciding level for the day is 15,850/4,738 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,060 – 16,180/4,800– 4,835 levels. However, if NIFTY trades below 15,850/4,738 levels for the first half-an-hour of trade then it may correct up to 15,730 – 15,520/4,703 – 4,641 levels.

Cement Dispatches – December 2011
Ambuja Cements’ dispatches stood at 1.93mn tonnes for December 2011, up by modest 5.7% yoy on a high base of last year. For CY2011, the company’s dispatches grew marginally by 4.2% to 20.96mn tonnes. During CY2010, the company added 2mtpa of capacity, post which its overall capacity stands at 27mtpa. We continue to remain Neutral on Ambuja Cements.

Reliance Industries gets nod to develop new D6 fields
The government has approved Reliance Industries' US$1.5bn plan to develop the new D6 block, which has the potential to produce additional 10mmscmd gas. RIL and, its partner, BP have four months to start work on the project as the KG D6 block faces adverse weather during the rest of the year. Until further clarity on the anticipated production from the block, we maintain our estimates and maintain our Buy rating on the stock with a target price of Rs.1,006.

HCC bags order worth Rs.289cr
Hindustan Construction Company (HCC) has received a Letter of Acceptance (LOA) for a Rs.289cr contract to construct a bulk water transmission system for  Gujarat Water Infrastructure Limited, a Government of Gujarat Undertaking. The work involves construction of a 57km-long water transmission pipeline between Dhanki and Maliya villages under the Swarnim Gujarat Saurashtra-Kutch, Water Grid Programme. The project will be completed in 12 months. With this order, HCC’s outstanding order book now stands at ~Rs.16,967cr (4.1x FY2011 revenue). We maintain our Neutral view on the stock.

Economic and Political News
- DoT to demand Rs.1,593cr from companies for under-reporting revenue
- Government may okay Rs.300cr for marketing support to MSMEs
- Union Budget to be presented on March 16, 2012
- Companies Bill may be cleared in Budget session: Law Minister

Corporate News
- RIL to fund Network 18’s Eenandu stake buy
- IDFC to raise upto Rs.4,500cr via infra bonds
- Bajaj Auto unveils its first-ever four-wheeler, RE60, in New Delhi
- Suzlon Energy bags order to supply 57 wind turbines in the U.S.

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Which stock should you buy?

Which stock should you buy?

In the equity market, stock tips are aplenty. Everyone believes themselves to be an expert just because they have a Trading and Demat account and have made some investment in the equity market! Therefore it is very important to have some basic knowledge about share market before you start investing in stocks according to share tips.

There are more than 6000 shares listed in India. But, broadly they can be categorized into four types:

 Growth stocks:  They are companies which grow faster than its industry or the market. Growth shares do not believe in paying dividends but reinvest profits for expansion and growth. They are marked by high P/E ratio and are always in demand due to potential price appreciation.

Value stocks: They are companies which have good fundamentals but are underpriced as they are temporarily out of favour. Value shares are great picks as they have a greater potential of growth. They have a low P/E ratio and low PBV ratio.

Income stocks: They are companies which regularly pay high dividends. These shares are often less volatile and may limited growth options. Profit from these stocks is in the form of regular dividends declared by the company. They are marked with higher dividend paying ratio.

Penny stocks: They are stocks with low price and low market capitalization. These shares are easy to manipulate because of low volumes. Investing in penny shares is extremely risky as these are extremely speculative in nature, illiquid and marked with volatile movements.

Stock Market Update on KPIT Cummins Infosystems for 1QFY2012

Stock Market Update on KPIT Cummins Infosystems for 1QFY2012 with an Accumulate recommendation and a Target Price of `206 (12 months)

For 1QFY2012, KPIT Cummins Infosystems (KPIT) reported a decent performance. For FY2012, management maintained its USD revenue guidance of US$275mn–285mn, i.e. 23–27% yoy growth, and has given PAT growth guidance of 25% yoy, i.e. `118cr. Management stated that the company’s demand pipeline is strengthening on account of recovery in its anchor vertical, manufacturing. Over FY2011–13E, we expect a strong 29% CAGR in USD revenue, with a 26.8% CAGR in PAT. Thus, we maintain Accumulate on the stock.

Quarterly highlights: For 1QFY2012, KPIT posted revenue of US$70.1mn, up 7.0% qoq, led by 4.0% qoq volume growth. In rupee terms, revenue came in at `316.1cr, up 6.4% qoq. The company’s EBITDA margin declined by 201bp qoq to 12.6% due to wage hikes given from April 1, 2011 (13% for offshore employees and 4% for onsite employees). PAT stood at `24.1cr, down 8.5% qoq due to higher tax rates (22.5% as against 13.8% in 4QFY2011) and lower other income of `2.2cr vs. `4.5cr in 4QFY2011.

Outlook and valuation: KPIT has been growing at a scorching pace of 7.7% CQGR over 3QFY2011–1QFY2012 after the complete integration of In2soft and CPG in 2QFY2011. The company has recently acquired 50% stake in Systime, which is based on Oracle practice and expects it to continue to post a 20% CAGR going forward. Management has been very proactive in terms of acquiring capabilities in the enterprise space to drive growth such as SAP (Sparta) and Oracle space (In2soft, CPG and Systime). Thus, we expect KPIT’s revenue to post a CAGR of 28.9% in USD terms and 27.1% in INR terms over FY2011–13E, with EBITDA and PAT CAGR of 30.9% and 26.8%, respectively. We maintain our Accumulate rating on the stock with a target price of `206, valuing it at 12x FY2013E (five-year historical one-year forward median P/E) EPS of `16.9.