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India Research
February 29, 2012
Domestic Indices BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT Global Indices Chg (%) (Pts) (Close)
Dealers Diary
Indian Markets are expected to open in the green taking cues from the SGX Nifty and Asian markets which are trading higher in the opening trade. The US Markets edged up higher on Tuesday buoyed by a report from the Conference Board showing a substantial improvement in consumer confidence in the month of February. The strong consumer confidence numbers for February over shadowed the 4% drop in consumer durables orders for the month of January. US markets were also boosted by optimism about the impact of the
1.6 1.9 3.4 2.8 1.1 3.0 3.9 3.0 3.4 1.3 (0.6)
Chg (%)
285.4 17,731 97.7 207.9 184.3 69.3 222.2 295.2 109.7 (34.4)
(Pts)
European Central Bank's long term refinancing operation announcement which is due today. Dow Jones closed higher than 13,000 for the first time since May 2008. The major European markets which saw some volatility during the course of the day, ended the day on the upside.
Indian markets closed positively on Tuesday after snapping the four day losing streak. The markets would be tracking the GDP figures for 3QFY2012 due to be released today.
Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com
23.6 13,005 20.6 12.4 88.6 23.0 4.8 2,987 5,928 9,723 2,970 2,452
Markets Today
The trend deciding level for the day is 17,679 / 5,358 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,828 17,926 / 5,409 5,442 levels. However, if NIFTY trades below 17,679 / 5,358 levels for the first half-an-hour of trade then it may correct up to 17,582 17,433 / 5,324 5,273 levels.
Indices SENSEX NIFTY S2 17,433 5,273 S1 17,582 5,324 PIVOT 17,679 5,358 R1 17,828 5,409 R2 17,926 5,442
350.9 21,569
Chg (%)
(Pts)
(Close)
News Analysis
Nedgroup Insurance selects TCS BaNCS Insurance for policy administration JSW Steel reports January production numbers Infotech Enterprises Analyst meet update Result Review Bosch, Abbot
BSE
NSE
1,240 234 44
2,816 13,991
Gainers / Losers
Gainers Company
Indiabulls Fin HDIL IFCI IRB Infra Reliance Infra
Losers Company
Cairn India TCS Container Corp ABB Wipro
Price (`)
223 113 44 188 603
chg (%)
14.8 13.8 12.0 11.5 11.5
Price (`)
367 1,228 982 822 420
chg (%)
(2.5) (1.8) (1.4) (1.0) (0.9)
verticals. The company is doing this by changing the incentive structure of customer-facing roles and is investing considerably to improve client mining and account management skills. Outlook and valuation: Infotech has been witnessing a 5.2% CQGR in its USD revenue over 2QFY20113QFY2012 because of inorganic growth due to the acquisition of Daxcon and Wellsco. Further, the company has witnessed price increases from some of its selective clients, which instills confidence in the companys performance going ahead. Thus, over FY2011-13E, we expect the company to post a USD and INR revenue CAGR of 17.6% and 23.2%, respectively. Infotech has been consistently underperforming on the operating margin front, which the company is now focused to address by levers such as improving utilization level, rationalizing SG&A expenses and shifting more work offshore. This year, management expects the companys operating margin to exit at ~17%, which can be easily achieved now, given the sharp INR depreciation. We expect EBITDA and PAT CAGR to be at 30.0% and 16.6% (lower due to tax rate moving to 33% from 17% in FY2011), respectively, over FY2011-13E. At the CMP of `144, Infotech is trading at 8.4x FY2013E EPS of `17.1. We maintain our Accumulate recommendation on the stock with a revised target price of `162.
Abbott India
For 4QCY2011, Abbott India Ltd. (AIL) reported a ~6% qoq decline in its revenue to `386cr, 10% below our estimate of `424cr. For CY2011, the company's top line came in at `1,477cr, marginally lower than our estimate of `1,516cr. The company's results are not comparable to the previous years results on account of its amalgamation with Solvay Pharma India Ltd. (SPIL) during the year. During the quarter, EBITDA margin came in at 11.9%, 106bp lower than our estimate of 13% on account of higher other income, which includes integration and amalgamation expenses; and stamp duty. Net profit stood at `120cr, 11% below our expectation of `135cr. We have slightly revised our earnings estimate downwards and expect the company's net profit to post a CAGR of ~30% over CY2011-13E. We maintain our Buy rating on the stock with a revised target price of `1,721, based on a target PE of 18x its CY2013E earnings.
Higher import duty will hurt sector: Private power companies to PM January infra output reduces to 0.5% yoy Rising crude oil prices disturbing: Finance Minister
Corporate News
ONGC, GAIL may offer `9,800cr for Cove IOC gets state permit to draw river water for refinery GMR Infra in talks to sell US$200mn in road assets Essar Oil loses `302cr insurance claim
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
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