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Market Outlook, 23-07-2013

Market Outlook, 23-07-2013

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Published by Angel Broking
23rd July, 2013
23rd July, 2013

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Published by: Angel Broking on Jul 26, 2013
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 www.angelbroking.com
Market Outlook 
 
July 23, 2013
Dealer’s Diary 
Indian markets are expected to open positive today following the positive openingin SGX Nifty and other Asian bourses.US markets continued their upward momentum on Monday even as McDonaldsand toy-maker Hasbro posted lower than expected earnings. S&P 500 index roseby 0.2%, while NASDAQ was up by 0.4%. However, Dow Jones ended the day flat.Data from the National Association of Realtors revealed that sales of previously-owned homes fell 1.2% in June; whereas, economists had expected a gain for themonth. The European markets ended Monday’s session in the green afterJapanese PM’s Liberal Democratic Party’s victory in parliament’s upper house.However, there were concerns of a slowdown in the German economy.Meanwhile Indian markets ended flat on Monday after witnessing intraday volatility. The market, which rose in early trade, lost intraday gains in late tradeafter weak Q1 results from L&T sent capital goods shares tumbling.
Markets Today 
The trend deciding level for the day is
20,163
/ 6,033 levels. If NIFTY trades abovethis level during the first half-an-hour of trade then we may witness a further rally up to 20,261 – 20,362 / 6,063 – 6,093 levels. However, if NIFTY trades below
20,163
/ 6,033 levels for the first half-an-hour of trade then it may correct up to20,062 – 19,964/ 6,003 – 5,974 levels.
Indices S2 S1 PIVOT R1 R2
SENSEX 19,964 20,062 20,163 20,261 20,362NIFTY 5,974 6,003 6,033 6,063 6,093
News Analysis
 
Lupin Pharma received approval for Glumetza® HCl ER Tablets
 
CCI probes Gujarat Gas Company 
 
Result Review: L&T,  Asian Paints, Blue Star
 
Result Preview: KPIT Cummins
Refer detailed news analysis on the following page
 
Net Inflows (July 19, 2013)
`
cr Purch Sales Net MTD YTD
FII 3,475 3,075 400 (5,605) 65,701MFs 521 593 (72) (1,105) (13,283)
FII Derivatives (July 22, 2013)
`
cr Purch Sales Net Open Interest
Index Futures 3,421 2,708 713 16,602Stock Futures 7,442 7,615 (174) 29,865
Gainers / Losers
Gainers LosersCompany Price (
`
)
chg (%)
Company Price (
`
)
chg (%)
GMR Infra 17
7.5
 Wockhardt 808
(9.1)
Century Tex 260
7.1
L&T 902
(7.5)
MMTC 56
 4.9
BHEL 162
(7.1)
MRF 14,383
3.7
Financial Tech 591
(6.3)
Tech Mahindra 1,172
3.7
Gitanjali Gems 104
(5.0)
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex
0.0
9 20,159Nifty 
0.0
3 6,032MID CAP
0.0
3 5,996SMALL CAP
(0.3)
(18) 5,688BSE HC
(0.2)
(22) 9,324BSE PSU
(0.6)
(37) 5,908BANKEX 
1.0
123 12,666 AUTO
1.1
114 10,800METAL
(0.3)
(19) 7,459OIL & GAS
(1.6)
(151) 9,010BSE IT
0.7
52 7,149
Global Indices
Chg (%)
(Pts) (Close)
Dow Jones
0.0
2 15,546NASDAQ
0.4
13 3,600FTSE
(0.1)
(7) 6,623Nikkei
0.5
68 14,658Hang Sang
0.3
54 21,417Straits Times
0.7
21 3,234Shanghai Com
0.6
12 2,005
Indian AD
R
 
Chg (%)
(Pts) (Close)
INFY
 2.7
1.3 $49.0
 WIT
1.4
0.1 $8.2
IBN
1.0
0.4 $36.1
HDB
0.4
0.1 $38.0
Advances / Declines BSE NSE
 Advances 1,023 569Declines 1,245 754Unchanged 148 74
Volumes (
`
cr)
BSE 1,651NSE 8,786
 
 
 www.angelbroking.com
Market Outlook 
July 23, 2013
Lupin Pharma received approval for Glumetza® HCl ERTablets
Lupin announced that its U.S. subsidiary, Lupin Pharmaceuticals, Inc. (LPI) hasreceived final approval for its Metformin Hydrochloride extended release tablets(HCl ER) 500 mg and 1000 mg from the United States Food and Drugs Administration (FDA). Lupin’s Metformin HCl ER Tablets, 500 mg and 1000 mgstrengths are the AB
rated generic equivalent of Santarus, Inc.’s Glumetza® HClER Tablets, 500 mg and 1000 mg strengths. Metformin HCl ER tablets is abiguanide and is indicated as an adjunct to diet and exercise to improve glycemiccontrol in adults with type 2 diabetes mellitus.
Glumetza® HCl ER tablets, 500 mg and 1000 mg had U.S sales ofapproximately US$ 144 million, for the twelve months ending March, 2013(IMS Health data). Lupin had earlier received the tentative approval for genericGLUMETZA® (Metformin Hydrochloride Extended Release Tablets) 1000 mgand 500 mg from the United States Food and Drugs Administration (FDA) inJanuary, 2012.Lupin believes that it is the first applicant to file an ANDA forGlumetza® HCL ER Tablets, 500 mg & 1000 mg strengths and as such will beentitled to 180 days of marketing exclusivity. During the six month exclusivity,the drug will contribute around US $20mn during the period.
We recommenda Neutral on the stock,
as the stock has risen significantly in the recent times.
 
CCI probes Gujarat Gas Company 
Media reports suggest that the Competition Commission of India (CCI) haslaunched an investigation into allegations of anti-compsetitive practices followedby Gujarat Gas. According to a CCI order, Saint Gobain had complained withregards to long-term contract, absence of an exit clause, a minimum guaranteeofftake liability and right of first refusal in its agreement with Gujarat Gas. Weawait clarity on the details of the order. Until then,
we maintain our Neutral ratingon the stock
.
Result Review 
L&T (CMP:
 ` 
902 /TP:
Under review
/Upside: -)
Larsen and Toubro (L&T) posted disappointing set of numbers for 1QFY2014,which were below our and street expectation on both, revenue and profitability front. This was mainly on the back of lower-than-expected execution and pooroperating performance. The top-line stood at
 ` 
12,555cr, registering a growth of5.0% yoy for the quarter and was lower than our and street estimate of
 ` 
13,100crand
 ` 
13,487cr respectively. The slow execution was mainly on the back of poorperformance in power and metallurgical segment. On the EBITDA front, company reported a yoy dip of 56bp to 8.5% against our expectations of 10.5%, owing tolower-than-expected execution and high construction and sub contracting cost. Onthe bottom line front, L&T reported a yoy decline of 16.2% to
 ` 
756cr which waslower than our estimate of
 ` 
911cr. This was mainly on the back of lower-than-expected execution and poor operating performance.
 
 
 www.angelbroking.com
Market Outlook 
July 23, 2013
L&T’s order backlog stands at
 ` 
1,65,393cr as of 1QFY2014, registering a growthof 8.0% yoy. Order inflows for the quarter came in at
 ` 
25,159cr (up 28.4% yoy)against our expectation of
 ` 
30,000cr.For FY2014, the management has given a guidance of 15-17% growth in revenueand 20% growth in order inflow. The guidance is mainly based on (a) high shareof exports in both order inflows and revenues (power T&D and hydrocarbon) and(b) continued momentum in infrastructure segment (building and factories,railways, airports, etc).
We believe L&T is best placed to benefit from the gradual recovery in the capexcycle, given its diverse exposure to sectors, strong balance sheet and cash flowgeneration as compared to its peers. We continue to remain positive on L&T whileour target price is under review.
 
Y/E SalesOPMPATEPSROEP/EP/BVEV/EBITDAEV/SalesMarch (
`
cr)(%)(
`
cr)(
`
)(%)(x)(x)(x)(x)
FY2014E 68,39610.04,52149.014.918.42.69.20.9FY2015E 77,43510.05,09655.215.316.32.48.30.8
  Asian Paints (CMP:
 ` 
5,075/TP:-/Upside:-)
For 1QFY2014 Asian Paints posted a 11.1% yoy growth in its consolidated netsales to
 ` 
2,818cr, which was in-line with estimates. The company’s decorativepaints business in India continued to perform well with paints volume growing by double digits. However, industrial paints and automotive coatings businessescontinued to be affected by economic slowdown. OPM fell by 156bp yoy to 15.7%and was in-line with estimates. Steep decline in INR offset decline in raw materialprices. Net Profit fell by 4.6% on a yoy basis to
 ` 
275cr.
We maintain a neutralrating on the stock.
Y/E SalesOPMPATEPSROEP/EP/BVEV/EBITDAEV/salesMarch (
`
cr)(%)(
`
cr)(
`
)(%)(x)(x)(x)(x)
FY2014E 12,33216.51,353 141.135.636.011.623.23.8FY2015E 14,52416.31,559 162.532.731.29.219.73.2
 
Blue Star 
 
(CMP:
`
159
 
/ TP:
`
215 / Upside: 35%)
 
Blue Star announced a decent set of numbers for 1QFY2014. Topline came in at
 ` 
771cr, marginally higher than our expectation of
 ` 
761cr and 5.4% higher on ayoy basis from
 ` 
731cr in 1QFY2013. On the operational front, EBITDA registered14.6% yoy growth to
 ` 
38cr owing to reduced raw material cost as percentage ofsales. EBITDA margin came in at 5.0% yoy as compare to 4.6% in same quarterprevious year. However, bottom line grew by just 10.9% yoy to
 ` 
23cr due toincreased depreciation (11.5%) and decline in other income (37.5%).Robust top line growth of 18.8% yoy in Cooling Product segment was offset by dipin revenue from EMPPACS segment by 6.7% yoy. Decline in EMPPACS segmentwas due to selective order booking (relatively higher margin) by the company leading to improvement in EBIT margin by 252bps yoy to 5.9% for the division.EBIT margin for Cooling Product segment contracted slightly by 58bps to 10.7%yoy in 1QFY2014.
We maintain our Buy recommendation on the stock with arevised target price of
`
215 based on a target EV/sales of 0.7x for FY2015E.

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