Share Trading Tips

Starbucks is fine tuning its plans to set up stores in the country in partnership with Tata Coffee

Suzlon Group’s subsidiary, REpower Systems SE announced that the company bagged cumulative orders of 151 Mw turbines from across Europe and North America

Lenders to Air India met to vet its revised debt restructuring proposal and said the troubled government airliner could raise funds from the market through government-backed bonds as one way to repay debt

State Bank of Hyderabad launched a loan product for purchase of gold and gold ornaments that carries 13% rate of interest and a general cap of Rs1.5mn.

Reliance Capital Asset Management has sold 26% stake to Nippon Life Insurance Company in a deal signed for Rs14.50bn

Kirloskar Oil Engines Ltd has said it will consider the buy-back of its fully paid-up equity shares of face value of Rs. 2 each.

Revenue grew 2.3%QoQ to USD103.7mn. Rupee revenue grew 13.8%QoQ to Rs5,197mn. Pricing growth of 3.5%QoQ and volume decline of 2.6%QoQ. EBITDA margin expanded 438bpsQoQ to 17.3%. Forex loss of Rs25mn against gain Rs171mn in Q2. PAT was Rs606mn, higher than streets’ and our expectation. EPS was Rs14.9, 10.7%QoQ.

IT services continued to grow at a healthy rate of 6.3%, thanks to milestone revenue from new Top client. Software Product Engg (SPE) registered a negative growth of 5%, due to seasonal weaknesses and intentional close down of few accounts. The company is confident of getting back SPE segment to growth trajectory in Q4. Travel & Transportation (T&T) led the growth with an increase of 16.4%. On geographical basis, Europe witnessed a good traction of 11.8%, followed by 8.6% growth from RoW (in $ terms).

Europe grew strongly 11.9%QoQ, US declined 1.5%QoQ and India declined 6.7%QoQ. US declined mainly due to seasonality and softness in PES revenues. Travel and transportation (T&T) surges- T&T grew strongly 16.5% and Manufacturing grew 2.3%QoQ. BFSI revenue had flat growth.

The Q3 revenues were inline with estimates, margin improvement and bottom line came as a positive surprise.  Management sounded cautious on Q4 results (similar kind of Q3 growth), especially in SPE segment, BFSI followed by manufacturing verticals.

Reliance Industries

The Mumbai-based oil refiner fell as gas output from Reliance Industries’ (RIL) eastern offshore KrishnaGodavari (KG)-D6 gas field declined to a fresh low of 38.66 million cubic metres per day in the week ended IS December 2011 as the company shut five wells due to water ingress, a news agency reported citing a status report filed by the company with the oil ministry. RIL is planning work over operations to revive sick wells at its D6 block in (KG basin, off India’s east coast. Production at the KG-D6 block may increase post the work over program. RIL late in November said that it has initiated arbitration proceedings against the government to seek an independent view of a tribunal on the issue of the company’s entitlement of recovery of entire costs on KG-D6 gas blocks from the revenue generated from the blocks.

Mundra Port & SEZ

The Ahmedabad-based private port and special economic zone fell on reports the Chennai Port Trust rejected the company’s bid to develop the Rs 3700-crore mega container terminal project at the Chennai port on the ground that revenue share of 5% offered by the company was too low. Mundra port was the only bidder for the project. The Chennai port is reportedly planning a re-bid for the deep water container terminal, the country’s first, to give another opportunity for those companies which participated in the project’s request for qualification stage. Mundra port increased its revenue share for the project to 5% from the initial 1.5%. However, even this was rejected by the Chennai port trust’s board. The board felt that even the 5% was too low, and should not be acceptable.

DLF

lndia’ largest real estate developer by market capitalisation along with its joint venture partner Hubtown sold 100% of their respective shareholding in DLF Ackruti Info Parks in Pune for an aggregate consideration of Rs 810 crore to an entity controlled by real estate fund affiliated with the Blackstone Group. BRfllMauritius Investment II. after obtaining all necessary approvals. Prior to the sale of their respective shareholding. DLF and Hubtown held 67% and 33% equity shares in DLF Ackruti. DLF Ackruti owns a notified IT/ITES special economic zone (SEZ) in Pune, Mahantshtra. The sale of stake in the SEZ is in line with DLF’s objective of divesting its non-strategic assets.

Oracle Financial Software

The Mumbai-based IT firm fell after dismal results from its US-based parent Oracle Corp, the world’s third biggest software maker. Oracle Corp reported 17% growth in its net income to USS 2.19 billion for the second quarter ended 30 November 2011 on account of higher sales of new software licences.Its total revenues rose by 2% to US$ 8.8 billion in the second quarter of the current fiscal. Oracle’s earnings fell short of market expectations for the first time in a decade due to slower demand for databases, applications and computer servers.

Buy PTC India at Rs 47.5-48.4, Stop loss at Rs 46.8, Target at Rs 50-52.6

Buy Adani Power at Rs 83.8-86.5, Stop loss at Rs 82.3, Target at Rs 90.7-97.6

Buy Gitanjali Gems at Rs 303.55, Stop loss at Rs 301, Target at Rs 310

Buy Piramal Healthcare at Rs 416.45, Stop loss at Rs 412, Target at Rs 424

HCL Technologies Ltd

Higher than expected growth in Core Software offset one-off decline in IMS

In case of IT services volume grew by 4.9% QoQ in Q2FY12 better than our expectation and higher than peer sets -for instance TCS and Infosys registered volume growth of 3.2% and 3.1%, respectively, on QoQ basis in December quarter. Whereas, Infrastructure services (IMS) registered 0.7% QoQ decline in constant currency basis primarily due to temporary stoppage of work in System Integration business in India (the same is reflected in decline in India’s share in total revenue from around 5% in Q1FY12 to around 3.5% in Q2FY12) because of significant depreciation in INR against the major global currencies leading to significant losses to the company .In the above mentioned contracts, the company is currently in re-negotiation process with both vendors and customers and expects the same to complete in Q3FY12.

EBITDA margin improved by 141 bps QoQ to 18.5% (in INR terms) in Q2FY12 against our expectation of improvement in margins by 166 bps QoQ primarily led by higher than projected losses in BPO segment. The improvement in EBITDA margin was primarily led by INR depreciation against the major global currencies which supported margins by 260 bps QoQ; whereas annual salary increment, SG&A investment and milestone based bonus payment adversely impacted margin by 104 bps QoQ in Q2FY12.

The company reported forex losses of Rs.76 crore in Q2FY12 against our projection of Rs.9 crore. Higher than estimated forex loss led lower than expected net profit of Rs.573 crore in Q2FY12 against our forecast of Rs.630 crore

Mphasis Ltd.

CMP – Rs. 314

Mphasis’s revenue (adjusted for reversal of credit note of Rs.66.5 crore in Q3FY11 and deferment of revenue booking of Rs.34.6 crore due to incomplete documentation in the previous quarter) declined by 2.8% on QoQ basis to USD272.1 million (excluding revenue of USD4.1 million from Wyde- company acquired w.e.f. Sept 2011). Dip in revenue was led by weakness in HP channel which declined by 7.6% (adjusted for reversal of credit note and deferment of revenue in Q3FY11) to USD170.2 million in Q4FY11. Whereas, revenue from direct channel increased by 8.2% QoQ to USD101.8 million in Q4FY11 (excluding revenue from Wyde acquisition).

EBTIDA margin (after adjusting for net onetime revenue of Rs.31.9 crore in Q3FY11 and reversal of provision for expenses of Rs.26.6 crore in Q3FY11) increased by 405 bps QoQ to 18.5% in Q4FY11. Increase in margin was supported by Indian Rupee depreciation against US Dollar by 7.4% QoQ and significant improvement in blended utilization rate –including trainees in BPO (by 400 bps QoQ to 70%) and ITO (by 500 bps QoQ to 80%) in Q4FY11.

Auto major Tata Motors said it plans to enter new global markets such as Thailand, Myanmar, Indonesia and Bangladesh with the ‘Nano’ within a year, as well as launch a CNG version of the car in the domestic market.

The company also said it plans to invest Rs 3,000 crore on capacity expansion and various product development activities next fiscal.

The second day was, however, marred by poor crowd management that pushed reporters to the backseat as a stream of general public visitors flooded the venue.

Another car-maker, General Motors, unveiled two new vehicles under the Chevrolet brand that will be launched later this year in the country.

Premium hatchback Chevrolet Sail and Chevrolet MPV Concept are the first two products from GM’s joint venture with Shanghai Automotive Industry Corporation (SAIC).

Meanwhile, announcing a comeback, three-wheeler manufacturer Piaggio Vehicles on Friday re-entered the scooter segment by introducing its iconic ‘Vespa’ at the 11th Auto Expo in New Delhi.

Force Motors, too, introduced another version of its Traveller passenger vehicle, priced at Rs 11.5 lakh.

It also showcased a hybrid variant of the Traveller at the auto show.