Pinc Research

Buy Cipla Ltd With Target Of Rs 313

Buy Cipla Ltd With Target Of Rs 313Mixed set of results, no near term triggers Cipla’s Q1FY12 results were a mixed bag. While growth on the sales front was disappointing in spite of increasing contribution from Indore SEZ, OPM surprised on the positive side on back of better product mix and break-even at Indore SEZ. The company has maintained its sales growth guidance of 10% and expects OPM to sustain at current levels for FY12.

Global Equities Outlook by PINC Research

Global Equities Outlook by PINC ResearchThe S&P 500 slipped after breaking the support of 1300. Its short term trend is clearly down and the next strong support to watch is 1175.

Bovespa continued its south bound move. Its outlook remains weak in the coming week. Further declines till 52500 cannot be ruled out.

SSE has nearly achieved our downside target of 2600. Its short term outlook continues to remain weak. A positive development will only emerge above 2700.

Currencies Outlook by PINC Research

Currencies Outlook by PINC ResearchUSD/INR made a stellar come back after recouping from the lows of around 44.00. Conitinuing to remain above 44.80 could mean more upsides till 45.20 or more.

Euro/Dollar remained subdued in line with our earlier view. This move should persist as long as it stays below 1.4300.

Dollar/Yen also made a reversal of sorts from the lows of around 77.00. Its sharp pmove suggests it could be making a base from hereon. A decisive move beyond 79.00 can take it closer to 81.00 in the coming weeks.

Commodities Outlook by PINC Research

Commodities Outlook by PINC ResearchAluminium appears to be moving in a broad trading range of $2400-$2700. Its near term outlook appear weak and it can target the lower end of the trading range.

Zinc’s trend has weakened below $2425. Its short term structure looks subdued for now. A decline till $2250 or lower is possible.

Copper weakened considerably below $9600. However, Its medium term structure still remains positive as long as it sustains above $9100.

Gold has moved in line with our anticipated view. Its positive bias remains intact in the short term.

Indian Stock Market Technical Analysis by Pinc Research

Even though we had expected a subdued move, the intensity of the fall foxed a lot of market participants including us. There was a sense of complete disdain when the bears almost prevailed over the bulls esp during the latter half of the week.

Buy Deepak Fertilisers & Petrochemicals With Target Of Rs 228

Deepak Fertilisers & PetrochemicalsDeepak Fertilisers & Petrochemicals (DFPCL) Q1FY12 results were slightly better than our expectations as net sales increased by 35.2%YoY to Rs4.7bn (PINCe Rs4.5bn) mainly driven by strong performance from chemical segment. However, OPM declined by 253bps to 23.8% due to higher raw material cost. Consequently, adj. net profit increased by 22.5% to Rs639mn (PINCe Rs596mn).

Buy Sona Koyo Steering Systems With Target Of Rs 24 : PINC Research

Buy Sona Koyo Steering Systems With Target Of Rs 24 : PINC ResearchSona Koyo Steering Systems’ (SONA) Q1FY12 results were significantly ahead of our estimates with a net profit of Rs92mn as against our estimate of Rs56mn. The out-performance was primarily led by higher than expected revenues and lower operating costs. Consequently, operating profit was higher by 30% YoY at Rs284mn with an EBITDA margin of 10.5% (our estimate of 9.2%).

Buy DLF With Target Of Rs 315

Buy DLF With Target Of Rs 315DLF’s Q1FY12 revenue at Rs24.5bn grew 20.5% YoY and was above our estimate of Rs23bn. PAT at Rs3.58bn was 7% below our estimate. However, margins at 45.4% was 320 bps ahead of our estimates. Higher interest cost (Rs4.95bn in Q1FY12 vs Rs4.5bn in Q4FY11) and lower than estimated other income lowered PAT. Operational cash flow, though improved sequentially to Rs8.4bn, may fall further if DLF fails to execute non core asset sale. Key strategy of the company would be to (i)Accelerate cash flows through plotted sales (sold ~2.2 msf in Q1FY12 of which 1.1msf is plot sales; total sale of 1.9 msf in Q4FY11).

Buy Blue Star With Target Of Rs 258

Blue Star LtdBlue Star Ltd’s (BSL) declared disappointing set of results. The net sales grew by 6.6% YoY to Rs7.03bn (PINCe Rs7.04bn). OPM contracted by 476bps to 3.7% on account of cost overrun in the Elec-Mech project division. This coupled with higher interest charges (+278% YoY) translated in a 74% fall in adj net profit to mere Rs98mn (PINCe Rs359mn).

Buy UltraTech Cement With Target Of Rs 1318

ULTRATECH CEMENTUltraTech Cement's (UTCEM) Q1FY12 results were significantly ahead of our estimates as better realisations and lower overhead costs aided profit growth. Blended realisations grew 5.5% sequentially to Rs4.4k/mt and were 3% above estimates. Net sales on a proforma basis grew 9.5% YoY to Rs44bn. EBITDA margins expanded 400bps sequentially on reduction in employee and other expenditure. On a proforma basis net profits were up 22.5% YoY to Rs6.8bn as against our estimate of Rs4.6bn.

Buy Geometric With Target Of Rs 55

Buy Geometric With Target Of Rs 55Q1FY12 revenue grew 2%QoQ to USD38.59mn, ahead of expectation. Engineering Services continued to show good traction and revenue from this segment grew 5.9%QoQ. The new management is focusing to increase the operating margin and improve revenue from Europe particularly in the automotive segment.

Buy Maruti Suzuki With Target Of Rs 1594

MARUTI SUZUKI INDIAOperationally Inline; Other Income Boosts Profits Maruti Suzuki (MSIL) Q1FY12 operational results met our expectations, however net profits surpassed it with higher other income and lower depreciation charges. Operating profits at Rs8.1bn met our estimates of Rs8bn. The positive surprise in results was due to other income which was 50% higher than estimate and an 18% QoQ decline in depreciation charge. Net profits at Rs5.5bn were ahead of our estimate of Rs4.4bn.

DLF Ltd Result Review by PINC Research

DLF Ltd Result Review by PINC ResearchQ4FY11 PAT at Rs3.45bn was 36% below our expectations due to adjustment for a onetime cost reset for input price inflation of Rs4.75bn. Revenue at Rs26.8bn was better QoQ and marginally above our expectation of Rs25bn. Margins declined significantly to 25% (47.5% in Q3FY11)on account of rising input cost. In our view, DLF will have to commit to more launches and sales (non-core assets sales) to facilitate the real debt reduction (Net debt increased marginally to 0.85x as against 0.84x in Dec’10).

Buy Godawari Power And Ispat Ltd With Target Of Rs 270

GODAWARI POWER AND ISPAT LTD.Operational benefits led by pellets; Valuation attractive In Q4FY11, Godawari Power's (GPIL) standalone revenue grew 40% YoY to Rs3.3bn despite subdued power performance, mainly on up 40% YoY steel sales growth, led by higher iron ore and pellet output. EBITDA grew 56% YoY to Rs724mn; OPM expanded 230bps to 22%. PAT grew 37% YoY to Rs310mn despite higher interest cost and effective tax rate.

Currencies Outlook by PINC Research

Currencies Outlook by PINC ResearchUSD/INR moved in line with our projected view. It may counter stiff resistance closer to $45.40 going forward. A move below 44.60 should lead to further downside till 44.20.

Euro/Dollar bounced from our projected downside target last week. It is currently trading very close to its resistance zone of 1.4350 - 1.4400. Its short term downtrend still remains intact and there is a fair chance for it to retest 1.4150 in the coming week.

Global Equities Outlook by PINC Research

S&P 500 continues to be in a consolidation mode and has been moving sideways. Failure to breach 1360 may see it test 1320 or lower in the coming week. A move above 1360 will lead to positive development in the short term.

Bovespa behaved in line with our anticipated view. It is currently trading near the support of 62300 below which it can slip further to 61000. On the upside, only a decisive move above 64000 will warrant a trend change.

Last week, SSE again bounced back from around 2800 which is its 200 DMA. As of now, this index may continue to consolidate in a trading range.

Commodities Outlook by PINC Research

Commodities Outlook by PINC ResearchAluminium achieved our downside target of $2500 that was mentioned in last week’s report. Its trend still remains down and it can further decline to $2450. Only a swift move above $2575 can cause any positive outcome in the immediate term.

Zinc remains in a trading range of $2200 on the upside and $2050 on the downside. A breakout/breakdown from this range will decide the next course of direction. This is an occasion to step back a bit to wait and watch the developments as they unfold.

Sector Watch Outlook by PINC Research

CNX Defty still remains in a downtrend. A move above 4350 may lead to a trend reversal in which case higher targets could be tested. As long as the support of 4150 is held, one could keep a positive bias to this index.

BSE PSU had a breakdown from the trading range and declined for the major part of last week. It is currently standing near an important support of 8400. A breach of 8400 can cause further declines till 8200.

The BSE Bankex slipped which was a bit contrary to our projected view. 12000 remains a good support. A bounce back closer to 12500 is possible if this support level is held in the near future.

Index Watch Outlook : PINC Research

Index Watch Outlook : PINC ResearchTrendline Resistance: The Nifty has adhered to a falling trend line since last week of April, 2011. This blue coloured trendline (refer chart) has been acting as a resistance in the short term.

Short / Medium Term Oscillator: The short term oscillator apart from being oversold is now exhibiting positive divergence. The medium term oscillators continue to be on the buy mode after a good weekly closing.

Buy Voltas Ltd With Target Of Rs 211

Buy Voltas Ltd With Stop Loss Of Rs 211Voltas Ltd’s Q4FY11 revenue grew by 16.4%YoY to Rs16.8bn. As expected, OPM contracted by 210bps to 8.4% dragged by Electro-Mech segment (PINCe 8.6%). Lower operating profit coupled with higher interest charges translated in a 23.9% fall in adj. net profit to Rs961mn (PINCe Rs882mn). Reported net profit was Rs1.0bn including exceptional income of Rs77mn.

Muted performance by Electro-Mech (MEP) segment:

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