Market Outlook
July 31, 2015
Dealer’s Diary
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
0.5
142
27,705
Indian markets are expected to open in green tracking SGX Nifty.
Nifty
0.6
47
8,422
U.S. stocks started the day in red following Commerce Dept. release of lower than
MID CAP
0.8
87
11,158
expected second quarter GDP expansion at 2.3%. Later during the day corporate
SMALL CAP
0.9
105
11,724
earnings caught attention, with U.S. stocks ending the trading session little changed.
BSE HC
0.8
127
16,715
U.K. markets were boosted by a number of well received company results, with Shell
BSE PSU
0.9
65
7,610
and Rolls Royce among the top risers.
BANKEX
0.6
122
21,145
AUTO
0.3
50
18,769
Markets made gains on last day of July series F&O expiry, with global cues
METAL
(0.2)
(17)
8,523
supporting post Federal Open Market Committee (FOMC) meet. Fed kept rates
OIL & GAS
0.3
30
9,929
unchanged, and gave no hint of lift-off coming in next meeting.
BSE IT
(0.8)
(85)
10,927
News & Result Analysis
Global Indices
Chg (%)
(Pts)
(Close)
Cipla- Launches the Pulmicort Respules 1mg /ml generic version
Dow Jones
(0.0)
(5)
17,746
Result Review: HSIL, Indoco Remedies, Jyothy Lab., IPCA, Exide, DRL
NASDAQ
0.3
17
5,129
Result Preview: Alembic Pharma, Glaxo Pharmaceuticals
FTSE
0.6
38
6,668
Refer detailed news & result analysis on the following page
Nikkei
1.1
220
20,523
Markets Today
Hang Sang
(0.5)
(121)
24,498
The trend deciding level for the day is 27,737 / 8,430 levels. If NIFTY trades above
Straits Times
(1.0)
(34)
3,250
this level during the first half-an-hour of trade then we may witness a further rally up
Shanghai Com
(2.2)
(83)
3,706
to
27,823
-
27,941
/
8,451
-
8,480 levels. However, if NIFTY trades below
27,737 / 8,430 levels for the first half-an-hour of trade then it may correct towards
Indian ADR
Chg (%)
(Pts)
(Close)
27,619 - 27,532 / 8,400 - 8,379 levels.
INFY
(0.3)
(0.1)
$16.9
Indices
S2
S1
PIVOT
R1
R2
WIT
(0.2)
(0.0)
$12.3
SENSEX
27,532
27,619
27,737
27,823
27,941
IBN
2.7
0.3
$9.6
NIFTY
8,379
8,400
8,430
8,451
8,480
HDB
0.3
0.2
$61.8
Net Inflows (July 29, 2015)
Advances / Declines
BSE
NSE
` cr
Purch
Sales
Net
MTD
YTD
Advances
1,755
910
FII
4,325
4,444
(120)
5,612
140,992
Declines
1,127
597
MFs
1,460
643
817
3,412
57,021
Unchanged
104
68
FII Derivatives (July 30, 2015)
Volumes (` cr)
` cr
Purch
Sales
Net
Open Interest
BSE
3,359
Index Futures
3,764
3,976
(212)
13,770
NSE
22,575
Stock Futures
12,121
12,186
(65)
46,980
Gainers / Losers
Gainer
Loser
Company
Price (`)
chg (%)
Company
Price (`)
chg (%)
UNITECH
7
18.2
RAJESHEXPO
462
(4.0)
BANKBARODA
168
10.0
ALSTOMT&D
562
(3.8)
PNB
150
9.0
SUNASIAN
484
(3.1)
ADANIENT
88
8.4
VAKRANGEE
158
(2.9)
JPASSOCIAT
88
7.9
NMDC
102
(2.9)
Market Outlook
July 31, 2015
Cipla- Launches the Pulmicort Respules 1mg /ml generic version
Cipla, launched asthma treatment medicine- Pulmicort Respules the generic
version, in partnership with Sandoz. Pulmicort Respules 1mg /ml version which is
used for long-term treatment of asthma and prevention of asthma. Cipla has 180
day exclusivity with Sandoz for the medicine. Branded sales of the drug stands at
US$242mn in the US market. Sandoz and Cipla are the only companies that have
approval for 1 mg/ml version of Pulmicort Respules. Cipla can generate around
US$20-30mn sales in FY2016, during the 180 day exclusivity period. Since the
drug will not make significant impact on the earnings, we maintain our EPS
numbers and neutral rating on the stock.
Result Review
Hindustan Sanitaryware India Ltd (CMP: `334/ TP: `374/ Upside:
11.8%)
Hindustan Sanitaryware Ltd (HSIL) reported mixed set of numbers for 1QFY2016.
Top line grew marginally by 0.2% yoy to `413cr. Revenue from Building product
segment increased by a modest 6.8% yoy to `205cr, while packaging product
division revenue declined by 5.6% yoy to `207cr. EBITDA was stable at `64cr while
EBITDA margin contracted marginally by 62bp yoy to 15.5% for the quarter. The
EBIT margin for Building products declined by 729bp yoy to 13.8% while for
packaging products division, EBIT margin improved by a 558bp yoy to 8.0%. On
account of lower interest outgo (39.1% yoy decline to `10.4cr), the net profit grew
by 15.7% yoy to `17cr.
At current market price, the stock currently trades at P/E of 13.4x on FY17E
earnings. We have assigned a P/E multiple of 15x and have arrived at a target
price of `374 and hence recommend an Accumulate on the stock.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2015E
2,076
18.5
151
20.9
9.7
16.0
1.6
6.9
1.3
FY2016E
2,302
18.7
180
24.9
10.6
13.4
1.4
5.9
1.1
Indoco Remedies (CMP: `371/ TP: /Upside: )
Indoco Remedies, for its 1QFY2016 results, marginally lower than expectations on
sales and OPM front, while net profit was marginally above expectations, on back
of higher other income during the period. On the sales front, the company posted
sales of `216cr V/s `198cr in 1QFY2015 and `219cr expected, a 9.1% yoy
growth, driven by exports which posted sales of `83.8cr V/s `69.9cr, a yoy growth
of 19.8%. The growth in the exports was driven by formulation, which rose by
23.1% yoy, while the API sales declined by 24.5% yoy. On the domestic sales front,
`131.6cr V/s `127.5cr, a yoy growth of 3.2%, mainly on back of domestic
formulation sales growth of 2.3% yoy.
On the operating front, the gross margins came in
64.6% v/s
63.3% in
1QFY2015, an expansion of 130bps yoy, while EBDITA margins came in at 16.3%
V/s 18.1% in 1QFY2015, a dip of 180bps yoy. This was against the expectation of
18.0%. This was mainly on back of R&D expenses, during the quarter which came
Market Outlook
July 31, 2015
in at 3.0% of sales V/s 2.2% of sales in 1QFY2015. Also, a higher deprecation
charge of `15cr V/s `9.5cr in 1QFY2015, negated the positive impact of higher
income `7.6cr V/s `1.3cr in 1QFY2015 consequently; the PAT came in at `20.3cr
V/s `20cr in 1QFY2015, a growth of 1.2% yoy. This was against the expectation of
`26.9cr during the period, mainly on back of lower than expected sales and other
income. We maintain our Neutral rating on the stock, on back of valuations.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
1,088
18.2
120
13.1
21.2
25.1
4.9
16.0
2.9
FY2017E
1,262
18.2
143
15.5
21.1
21.1
4.1
13.5
2.5
Jyothy Laboratories (CMP: `294/ TP: -/ Upside: -)
For 1QFY2016, Jyothy Laboratories (JLL) reported numbers that were in-line with
our estimates. The company reported top-line of `398cr which is up 12.1% on yoy
basis and in-line with our estimate of `403cr.
The soap and detergent segment registered yoy growth of 10.7% to `324cr while
home care segment grew by 19.0% yoy to `71cr. The operating margin for the
quarter contracted by 117bp on yoy basis and came in at 14.2%, against our
estimate of 14.9%, mainly because of higher than expected employee and other
expenses. The advertisement cost and selling expense for the quarter stood at
`49cr (12.2% of net sales). Consequently, the net profit came in at `47cr during
the quarter, declining by 9.7%.
At current market price, the stock is trading at 34.0x its FY2017E earnings. We
have a Neutral rating on the stock.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
1,607
12.1
142
7.8
14.2
37.7
5.2
3.2
26.4
FY2017E
1,813
12.2
157
8.7
14.6
34.0
4.8
2.7
22.4
Exide Industries Ltd (CMP: `145/ TP: `164 /Upside: 13% )
Exide Industries Ltd 1QFY2016 results were in line with our estimates. Revenues
declined 6% yoy to `1,800cr (in line wih our expectations of `1,731 cr) on account
of sluggish automotive OEM demand. Further, subdued demand in the home UPS,
power and traction segment also impacted the topline. Operating margins
declined 40 bp yoy to 14.8% (we forecasted margins of 15.7%). Topline de-growth
coupled with pricing pressures due to competition led to margin stress. Net Profit
at `155.2cr dipped 16% yoy and was in line with our estimate of `162cr. We
currently have Accumulate rating on the stock.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
7,919
13.9
624
7.3
13.8
19.8
2.7
10.9
1.5
FY2017E
9,028
14.4
728
8.6
14.4
16.9
2.4
9.2
1.3
Market Outlook
July 31, 2015
IPCA Labs (CMP: `694/ TP: `736 /Upside: 6.1%)
IPCA Labs, announced lower than estimated results for 1QFY2016. The company
posted sales of `751cr V/s `820cr estimated a dip of 15.0% yoy. The domestic
sales came in sales of `374cr, a growth of 4.7% yoy, while exports came in at
`377cr, a dip of 32.0% yoy. Export formulation, which came in at `224.8cr, which
dipped 42% yoy. The dip in the sales came on back of import alerts for its USFDA
facilities, lower anti malarial business and impact on emerging markets on back of
currency fluctuations. The EBDITA margins consequently came in at 10.0% lower
than 12.6% expected and v/s 24.0% in 1QFY2015, on back of lower sales during
the quarter. Consequently; the Adj. PAT came in at `28cr V/s `69cr estimated and
V/s `145cr in 1QFY2015, de-growth of 80.8% yoy. We maintain our Accumulate
rating on the stock with a target price of `736.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
3,533
18.6
356
28.2
15.0
24.6
3.4
14.6
2.7
FY2017E
4,109
19.6
440
34.8
15.9
19.9
2.9
11.8
2.3
Dr Reddy’s Laboratories (CMP: `3,908/ TP: /Upside :)
Dr Reddy’s Lab (DRL), for its 1QFY2016 results, posted lower than expected results
on sale and net profit front, while the OPM came in at better than expected. On
sales front, the company posted a 6.8% yoy growth in sales on top line to end the
period at `3,758cr V/s `4,000cr expected, mainly driven by global generics.
Global generics, which posted sales of `3,096.1cr, registering a yoy growth of
8.0%, while the PSAI, which posted sales of `561.4cr, a yoy growth of 1.0%. The
propriety products (`100.3cr) and others posted a yoy growth of 12.0%. The key
driver of growth in the Global Generic business was Europe (`191.2cr), registering
a yoy growth of 43.0%, mainly driven by the new products during the quarter.
Another region which posted a robust growth during the quarter was India, which
posted a yoy growth of 19.0%.
On, the operating front, the gross margins came in at 67.1% V/s 64.6% in
1QFY2015, mainly on back of improved sales from Europe and India, which
aided the OPM’s to come in at 26.2% V/s 23.2% in 1QFY2015, and 23.3%
expected. R&D expenditure during the quarter came in at 11.7% V/s 12.9%
expected and 11.0% of sales in 1QFY2015. Consequently; the PAT, came in at
`625cr V/s `642cr expected and V/s `550cr in 1QFY2015, a growth of 13.6%
yoy. The, other income during the period came in at `34cr V/s `72cr in
1QFY2015, while lead the PAT growth to be lower than the operating profit
growth during the period. We maintain our Neutral rating on the stock, on back of
valuations.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
17,753
22.7
2,713
159.2
22.1
24.5
5.0
16.3
3.7
FY2017E
20,668
22.3
3,121
183.2
21.1
21.3
4.1
14.0
3.1
Market Outlook
July 31, 2015
Result Preview
Alembic Pharma (CMP: `746/ TP: /Upside: )
Alembic Pharma, for its 1QFY2016 results, is expected to post a robust growth
during the period. On sales the company is likely to post sales of `601cr V/s
`492cr in 1QFY2015, driven by the robust growth in exports and domestic
markets. On the operating front, the gross margins are expected to remain
constant at 64.1% v/s 64.0% in 1QFY2015, which will aid the OPM’s to come in at
19.8% V/s 19.5% in 1QFY2015, an expansion of 30bps yoy. Consequently, the
PAT is expected to come in at `86cr V/s `65cr in 1QFY2015, a growth of
33.1% yoy. We maintain our Neutral rating on the stock, on back of valuations.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
2,405
19.9
334
17.7
32.6
42.1
12.1
29.3
5.8
FY2017E
2,859
20.4
415
22.0
30.9
33.9
9.2
23.8
4.8
Glaxo Pharmaceuticals (CMP: `3,540/ TP: /Upside:)
Glaxo Pharmaceuticals 1QFY2016 results, is expected to post a robust growth
during the period. On sales the company is likely to post sales of `700cr V/s
`655cr in 2QCY2015, a growth of 6.9% yoy, driven by the growth in domestic
markets. On the operating front, the gross margins are expected to remain
constant at 57.5% V/s 51.5% in 2QCY2015, which will aid the OPM’s to come in
at 20.9% V/s 16.7% in 2QCY2015, an expansion of 420bps yoy. Consequently,
the PAT is expected to come in at `135cr V/s `98cr in 2QCY2015, a growth of
37.7% yoy. We maintain our Neutral rating on the stock, on back of valuations.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2016E
2,870
20.0
504
59.5
28.5
59.5
17.6
49.2
9.8
FY2017E
3,158
20.1
536
63.2
32.2
56.0
18.5
44.9
9.0
Quarterly Bloomberg Brokers Consensus Estimate
ICICI Bank Ltd- July 31, 2015
Particulars (` cr)
1QFY16E
1QFY15
y-o-y (%)
4QFY15
q-o-q (%)
PAT
2,920
2,655
10
2,922
0
Shriram Transport Finance Co Ltd- July 31, 2015
Particulars (` cr)
1QFY16E
1QFY15
y-o-y (%)
4QFY15
q-o-q (%)
Net sales
1,114
2,016
(45)
2,311
(52)
EBITDA
844
1437
(41)
1,670
(49)
EBITDA margin (%)
76
71
72
Net profit
329
306
7
317
4
Market Outlook
July 31, 2015
Economic and Political News
States rush to meet Smart City deadline; Kerala, J&K seek more time
Rise in rural household electrification: NSSO
Panel report on real estate regulation Bill tabled in RS
Corporate News
Nestle agrees to HC's proposal on fresh testing of Maggi
RPower takes govt to court on Chhatrasal coal block cancellation
Farallon, Blackstone to bid for RCom tower stake
Top Picks
Large Cap
Market Cap
CMP
Target
Upside
Company
Sector
Rating
(` Cr)
(`)
(`)
(%)
Axis Bank
Financials
134,447
Buy
566
716
26.5
ICICI Bank
Financials
168,888
Buy
291
370
27.1
Infosys
IT
245,566
Buy
1,069
1,306
22.2
Power Grid
Power
74,446
Buy
142
170
19.5
Sun Pharma
Pharma
195,950
Buy
814
950
16.7
TCS
IT
485,951
Buy
2,481
3,168
27.7
Tech Mahindra
IT
50,509
Buy
525
646
23.0
Yes Bank
Financials
33,969
Buy
812
1,006
23.8
LIC Housing Fin.
Financials
24,771 Accumulate
491
553
12.7
MRF
Others
16,710 Accumulate
39,400
43,439
10.3
Source: Angel Research, Bloomberg
Mid Cap
Market
CMP
Target
Upside
Company
Sector
Rating
Cap (` Cr)
(`)
(`)
(%)
Bajaj Electricals
Others
2,587
Buy
257
341
32.9
Garware Wall Rope Others
651
Buy
298
390
31.1
Hindustan Media Ven. Media
1,785
Buy
243
292
20.1
MBL Infrastructures Construction
1,173
Buy
283
395
39.4
Mangalam Cements Cement
715
Buy
268
349
30.2
Minda Industries
Auto Ancillary
863
Buy
544
652
19.9
MT Educare
Others
470
Buy
118
141
19.4
Radico Khaitan
Others
1,235
Buy
93
112
20.6
JK Tyre
Auto Ancillary
2,521 Accumulate
115
127
10.3
Source: Angel Research, Bloomberg
Market Outlook
July 31, 2015
Research Team Tel: 022 - 39357800
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