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Monday, April 4, 2011

Indian stock market and companies daily report for Monday April 04, 2011

Indian stock market and companies daily report for Monday April 04, 2011 : Trading for the new financial year began on an upbeat note with data showing heavy buying by foreign funds coupled with gains in Asian stocks, which underpinned sentiments. The market swung between gains and losses in mid-morning trade. The key benchmark indices regained the positive zone after hitting fresh intraday lows in mid-morning trade, supported by data showing strong manufacturing in March 2011 and higher sales by car major Maruti Suzuki in the previous month. However, volatility was witnessed as the key benchmark indices slipped into the red soon after a rebound in mid-afternoon trade. The key benchmark indices ended a choppy trading session as profittaking emerged after recent strong gains.

The Sensex and Nifty lost 0.1% each. The mid-cap and small-cap indices closed up by around 1.6% and 2.2%, respectively. Among the front liners, RCOM, JP Associates, BHEL, Hindalco and M&M gained 2–4%, while NTPC, SBI, RIL, Tata Power and ICICI Bank lost 1–2%. Among mid caps, Hindustan Oil, Electrosteel Castings, Jindal South, Kingfisher Air and Ispat gained 10–12%, while Kansai Nerolac, Rajesh Exports, Sanwaria Agro, Jagran Prakshan and Zydus Wellness lost 3–4%.

Markets Today
The trend deciding level for the day is 19455 / 5832 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19528 – 19635 / 5854 - 5882 levels. However, if NIFTYtrades below 19455 / 5832 levels for the first half-an-hour of trade then it may correct up to 19348 – 19275 / 5804 - 5782 levels.

Auto sales numbers – March 2011

Maruti Suzuki (Maruti)
Maruti reported better-than-expected 28.2% yoy (strong 9.2% mom) volume growth in March 2011 to 121,952 units, backed by strong performance in domestic markets. Domestic volumes increased by impressive 38.8% yoy (8.7% mom) to 110,424 units. However, the company continued to witness sluggish growth in exports markets and posted a 26.1% yoy decline to 11,528 units. This, according to the management, was due to the removal of scrappage incentives in European markets. Growth in domestic markets came on the back of robust volume growth in the A2, A3 and C segments, registering 43.3% (8.8% mom), 33.1% (6.8% mom) and 32.6% yoy (6.5% mom) growth, respectively. Maruti reported its highest-ever monthly sales during the month of March 2011.

Mahindra & Mahindra (M&M)
M&M reported in-line volume growth of 19.9% yoy (9.4% mom) in total sales to 57,370 units, aided by strong 22.8% yoy growth in tractor sales (19,848 units) and healthy 18.4% yoy growth in automotive sales (37,522 units). In the tractors space, domestic sales remained upbeat, posting a strong 24.5% yoy (3.3% mom) increase in volumes to 18,729 units, while exports volumes remained flat at 1,119 units. The tractor segment posted its highest-ever domestic sales in March 2011. Within the automotive segment, the fourwheeler pick-up segment grew by strong 15.4% yoy, Logan sales maintained its impressive run posting growth of 190% yoy and three-wheelers registered 32% yoy growth. Automotive exports registered 16% yoy growth during March 2011.

Tata Motors (TML)
TML reported 10.9% yoy (7.5% mom) growth in total volumes, led by better-than-expected numbers in the commercial vehicles (CV) segment, while passenger vehicle (PV) sales were lower than expected. Within the CV space, total volumes stood at 55,358 units, up 17.7% yoy (22% mom) units, as the M&HCV and LCV segments registered strong growth of 11.8% (30.6% mom) and 23.1% yoy (15.7% mom), respectively. In the PV segment, thecompany reported a 0.4% yoy (12.9% mom) decline in offtake, largely due to a 40.3% yoy (30.9% mom) decline in Indica dispatches to 6,937 units. Nano volumes remained strong, registering an 84.9% yoy (5.4% mom) jump in March 2011.

Hero Honda (HH)
HH reported above-expectation 24.4% yoy (9.3% mom) growth in monthly volumes to 515,852 units, led by robust performance across all product segments. Refreshed product ranges, new product launches and innovative branding and marketing initiatives continued to drive performance on the volume front. HH recorded its highest-ever monthly sales in March 2011. In the scooter segment, Pleasure reported monthly run rate of ~30,000 units.

TVS Motor (TVS)
TVS reported better-than-expected 28.2% yoy (7.8% mom) growth in total volumes to 191,208 units, led by strong growth across all its segments and backed by sustained momentum in domestic sales. While two-wheeler volumes increased by 27.3% yoy (7.8% mom), three-wheeler sales jumped by 82.1% yoy (5.1% mom). Volume growth in the twowheeler segment continued to be driven by impressive 49.6% yoy (5.8% mom) growth in scooters to 42,655 units and 24.2% yoy (11.4% mom) growth in motorcycle sales to 79,642 units. Three-wheeler sales registered an 82.1% yoy jump in volumes to 4,427 units in March 2011. Exports increased by 34.4% yoy (12.2% mom) to 26,979 units, registering the highest-ever monthly exports.

Cement numbers – March 2011

Cement manufacturers posted growth in dispatches during March 2011 due to pick-up in construction activity. ACC’s dispatches grew by 12.4% yoy to 2.18mn tonnes (mt), aided by capacity addition. Ambuja Cements’ dispatches were also higher by 5.1% yoy to 2.05mt. UltraTech Cement’s dispatches grew modestly by 2.2% yoy to 3.78mt. We remain Neutral on ACC, Ambuja Cements and UltraTech Cement.

TCS to provide end-to-end ADM support to Air Liquide
TCS has signed a multi-million dollar contract to provide application development and maintenance (ADM) services to Air Liquide USA LLC, a subsidiary of Air Liquide Group. Leveraging its global delivery model, TCS will provide end-to-end ADM services to support 5,800 Air Liquide US LLC users 24x7, improving operational effectiveness and efficiency. TCS will oversee day-to-day IT management through a managed services model and offer immediate problem diagnosis and repair services for an added level of IT support. TCS will also bring in application preventive maintenance as part of its service delivery model to increase productivity and reduce repair costs by streamlining IT costs and enhancing business performance. We maintain Accumulate on the stock with a target price of Rs.1,287.

Wipro to acquire SAIC’s global oil and gas IT services business
Wipro will acquire US-based Science Applications International Corporation’s (SAIC) global oil and gas IT practice for an all-cash consideration of nearly US$150mn (~Rs.675cr). The purchase is valued at approximately 0.8 times the revenue and six times the EBITDA on a trailing 12-month basis. The deal is expected to be completed by Juneend. The purchase covers only the IT business of the firm's oil and gas vertical, which provides consulting, system integration and outsourcing services to global oil majors.

SAIC’s IT business is expected to contribute US$188mn to the top line annually, with operating margin of 13.5%. Hence, margins of the energy and utilities vertical are expected to come down initially but then increase going forward. The energy and utilities vertical, which currently contributes 10% to Wipro’s revenue, is expected to inch up to 11.1% after this acquisition. Consequent to the deal, nearly 1,450 employees are expected to transition to Wipro across North America, Europe, India and the Middle East.

The completion of the acquisition is subject to customary closing conditions and regulatory approvals and Wipro said it would be able to integrate this business in the first quarter of FY2012.

SAIC’s IT business will contribute merely ~2.3% to the company’s top line. We currently keep our estimates unchanged, owing to the ongoing transformation phase in the company. We maintain our Accumulate view on the stock with a target price of Rs.507.

Lakshmi Machine Works to buy Rieter’s share in JV
Lakshmi Machine Works (LMW) has announced buying out Rieter’s share in its JV, Rieter LMW Machinery Ltd. (RLM). Currently, the holding of the JV is 50:50. Rieter had offered to sell its holding of 50% shares in RLM to LMW, which the latter has accepted. The value of shares will be determined as on June 30, 2011.

Once the process of disinvestment by Rieter is complete, RLM will become a wholly owned subsidiary of LMW. The turnover from this JV was around Rs.63cr. We believe the impact of this development would be limited, as Rieter already has a presence in India as an independent entity. At the CMP, the stock is trading at 9.1x FY2013E EPS. We maintain our Buy view on the stock with a target price of Rs.2,947.

Economic and Political News
- February exports rise by 50% yoy
- FDI in services sector dips 23% to US$3bn
- Oil companies hike ATF prices by 1.4%
- Road Ministry to seek private participation for Rs.1.19lakh-cr projects
- Coal Ministry to put 58 mines on the block in the next six months

Corporate News
- Government to consider Cairn's stake sale to Vedanta on Wednesday
- Wipro to acquire SAIC’s global oil and gas IT services business
- JSW Steel revives London listing plans
- ONGC gets assets insured for US$27.70mn for FY2012
- HCC redeems FCCBs worth US$133mn
- Ballarpur Industries puts BILT Paper IPO plan on hold For the latest updates PRESS CTR + D or visit Stock Market news Today

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