Share Trading Tips

The rupee appreciated by 25 paise to 52.26 per dollar in early trade on Tuesday, as the US currency weakened against euro and other major currencies overseas.

Dealers said firm domestic equity markets also supported the local unit.

The rupee had gained 20 paise to close at nearly three- week high of 52.51/52 per dollar on Monday on the Interbank Foreign Exchange sustained selling of the US currency by exporters.

Meanwhile, the 30-share BSE Sensex rose by 151.58 points, or 0.96 per cent, to 15,966.30 in opening trade on Tuesday

Hindalco has grown its net profits at an average rate of 11% over the past five years. Over the next three years, we expect profit growth to improve at an average rate of 18

ROIC is an important tool to assess a company’s potential to be a quality investment by determining how well the management is able to allocate capital into its operations for future growth. A ROIC of above 15% is considered decent for companies that are in a growth and expansion phase. Though Hindalco’s last three years’ average ROIC has been about 17.5.

A stable dividend history inspires confidence in the management’s intentions of rewarding shareholders. Hindalco’s average payout ratio has been 10.7% over the past 5 fiscals. Thus, we have assigned a high risk rating of 2. Promoter holding: A larger share of promoter holding Read the rest of this entry »

Unichem Laboratories Ltd

BSE 506690  NSE :  UNICHEMLAB

Unichem is expanding quickly in the US market. Currently the company has ANDA filings of 22, with 11 approved & 7 launched. The management has guided revenues of ~USD 7mn & USD 15mn in FY12 & FY13 respectively. Further it expects to file ~1-2 ANDA’s per quarter. Currently huge R&D expenses (~5% of sales) are being made for identification & developing ANDA’s which has resulted into loss for the company in the US market at profitability level. But Unichem seems to be quite confident of recovering and generating profits at least by FY13

A substantial amount is expected to be generated from the contract manufacturing as the company in addition to European & Canadian companies has also tied up with some of the US players. Secondly Ghaziabad facility is running at full utilizations & would be used up for the production which was earlier running at levels of 25-30%. The management expects to earn around Rs 75-85 crs in FY12 & Rs 100-110crs in FY13 from the agreement.

Buy Tata Motors at Rs 188.4-191.5, Stop loss at Rs 186.1, Target at Rs 197-205.5

Buy Cairn India at Rs 321.4-325.7, Stop loss at Rs 318, Target at Rs 333.4-345.4

Asian markets were mixed in trade as it already priced in improvement of global manufacturing data of December.

China’s Shanghai Composite rose 5.63 points or 0.26% to 2,205.04 and Jakarta Composite went up 35.54 points or 0.92% to 3,893.43.

Japan’s Nikkei 225 Average gained 97.80 points or 1.16% at 8,553.15 and Straits Times was up 9.89 points or 0.37% at 2,698.25. Meanwhile, Taiwan Weighted was trading at 7,074.88, up 21.50 points or 0.30%.

Mundra Port & SEZ Ltd

Mundra Port & SEZ (MPSEZ) recorded robust set of numbers in Q2FY12 largely in line with our estimates with a topline growth of 11% sequentially and 34% y-o-y.

·  Topline for Q2FY12 was Rs 588 Crs (v/s estimate of 571 Crs ~ 3% variance). Company posted EBITDA of Rs 410.6 Crs, operating margins were impacted on the back of higher operating expenses & admin expenses on both sequential and y-o-y basis

·  Net profit of Rs 273 Crs was largely in line with our estimates of Rs 281 Crs (2.8% variance). The variance was on the back of higher than expected net finance cost in the quarter resulting in a 710 bps erosion in margins y-o-y and 401bps sequentially.

The company handled 31.88MT of cargo in H1FY12 v/s 25.2MT in H1FY11 (up 27% y-o-y). we continue to maintain our yearly estimate of 76 MMT of Cargo with average realizations at Rs 340/tonne.

MPSEZ is currently trading at a PE of 31x FY12E & 20.78x FY13E earnings and at an EV/EBIDTA of 19.4x FY12E & 14.8x FY13E

Ambuja Cement Ltd

Ambuja Cement Ltd net revenues stood at Rs 1805.1 crore, a growth of 15.4% y-o-y from Rs 1564 crore in Q3CY10 and a decline of 15% on a q-o-q basis on back of decline in realization in the Aug-Oct quarter because of the monsoon factor. Dispatches for the quarter were 4.69 mn tonnes, higher by around 7.6% on y-o-y basis. The growth in top-line was also driven by the concentrated efforts of cement players, wherein the net realizations for Ambuja increased to ~Rs 192.4/bag, an increase in price of 6.5% on a y-o-y basis coupled with a growth in dispatches.The EBIDTA/tonne declined sharply on a q-o-q basis to Rs 681/tonne, mainly on back of a higher power & freight cost.

Rallis India clocked healthy topline growth of 19.4% y-o-y to Rs 439.5 crores, largely driven by 19% y-o-y growth in the core business offset by subdued performance by Metahelix.

Core business (standalone) sales grew 19% y-o-y to Rs 436.5 crores, inline with our estimates, driven by domestic volume growth. EBITDA margins declined by 87 bps y-o-y on account of higher generics volume, high raw material costs as a % to sales, resulting in lower EBITDA growth.

PAT improved by 5% y-o-y to Rs 61.9 crores, impacted by higher depreciation, interest expense & lower other income.

Metahelix reported sales of Rs 2.5 crores & Operational loss of Rs 3.5 crore on account of seasonally weak quarter for seed business.

Metahelix reported a dismal performance with net sales of Rs 2.5 crores as 70-80% of sowing occurs in the period of April to July.

Also continuous rains in North & East affected the sowing of pearl millet (Bajra) & vegetables where Metahelix has a strong presence. Fixed cost continued to grow at same runrate.

DLF posted its Q2FY12 results above our estimates with a topline of Rs 2532 Crs, a growth of 4% q-o-q and 7% y-o-y. EBITDA margins improved significantly by 711 bps on a y-o-y basis on the back of decrease in operating expenses, on a sequential basis margins improved by 90 bps. Net margins remained flat sequentially, however declined by 295 bps y-o-y on the back of surge in interest cost and higher effective tax rate.

·DLF booked 1.28 msf sales in Q2FY12 & FSI Land sales of 2.9 msf under closure (Valuing agg of Rs 615 Crs), Leasing volumes of 0.66 msf during the quarter

· Labour shortage for construction coupled with delay in approvals led to slower launches in the quarter

· DLF had 53 msf of projects area under construction at the end of the quarter. Total developable potential at 359 msf.

· The company suffered a MTM loss of forex loss of Rs 142 Crs in Q2FY12 on its subsidiary loan of US$240mn (Aman Resorts).

·Definitive agreements signed for the sale of Noida IT Park & documentation at an advanced stage for the sale of the Pune IT SEZ; final completion on both these transactions expected in the current quarter

IRB Infrastructure Ltd

IRB Infra reported Q2FY12 consolidated revenues of Rs 736 crore (up 5%, YoY) that is inline to our expectation, primarily increased by construction Income of Rs 528 crore (up 79%, YoY) and Toll revenue grew by Rs 238 crore (up 17%, YoY).

EBIDTA grew to Rs 321.5 crore (up 36%, YoY) and EBIDTA Margins fell by 452 bps YoY basis, primarily led by 624 bps increase in raw material cost, however contract expenses increased by 70 bps on a YoY basis. PAT has increased to Rs 110.1 crore (up 11%, YoY), primarily impacted by effective tax rate of 24.9% and high interest costs.

The EPC work is finished in two projects (Surat-Dahisar & Kolhapur) out of six ongoing projects that will help to commence toll activity at Kolhapur projects. The order backlog stood at Rs 96.3 bn that shows the revenue visibility over next 36-40 months.

The consolidated revenues of Rs 736 crore (up 5%, YoY), primarily increased by construction Income of Rs 528 crore (up 79%, YoY) and Toll revenue grew by Rs 238 crore (up 17%, YoY).