BSEIndia: All Stock Market News: [sharetrading] 9AM with Emkay

Thursday, March 04, 2010

[sharetrading] 9AM with Emkay - 5 March, 2010

9AM with Emkay - 5 March, 2010

The Morning Meeting Notes as on 5^th March, 2010.

n Research Views

MAGFIL completes QIP of Rs2.45bn

Manappuram General Finance and Leasing (MAGFIL) completed its QIP of Rs2.45bn at the price of Rs691. The QIP is marginally higher than our assumptions of Rs2.25bn (in FY11) but lower than Rs3.0 approval taken by the board of MAGFIL.

The QIP would result in 3% upgrade in our adjusted book value for FY11E and FY12E. We remain enthused about unique business model of MAGFIL' "loan against gold business" which has virtually no competition, has high margins and low risks.

We reiterate our BUY rating on the stock with price target of Rs900.

n Research Update included

Hero Honda - Management meet update ; ACCUMULATE ; Target: Rs 1,870

We came back positive from our meeting with the management of Hero Honda (HH) on (1) volume outlook – no impact visible of below expected rabi output/lack of significant pre-buying before budget (2) lower raw material cost pressure and (3) pricing discipline in case the industry volume fails to meet the current expectations for FY11. We would like to highlight that the key players of industry are looking at double digit volumes growth in FY11 with Hero Honda being the most conservative in terms of guidance.

Management is aiming a volume growth of 10% in FY11 over (our estimates of 8.5%), driven by strong underlying demand (share of rural sales has touched 44%), new model launches along with upgrades/variants. We expect management to increase its focus on premium bikes, where its market share has declined front around 30% six months back to currently around 16%.

We have upgraded our FY10 volume estimates by 3% to 4.6mn units. Consequently, we have upgraded our FY11 volume estimates by 3% to 5mn units (representing 8.5% volume growth). We have upgraded our FY10 and FY11 estimates by 3.5% to Rs 110.1 and Rs 124.6 respectively. At Rs 1811, the stock trades at PER of 14.5x and EV/EBIDTA of 9x our FY11E estimates. We maintain our ACCUMULATE rating on the stock with a target price of Rs 1870 (up by 4%), valuing the company at 15x PER and 10x EV/EBIDTA our FY11 estimates.

n Technical Comments

Momentum sees deterioration

After a quite choppy session, finally Nifty ended the day on a dull note with a loss of 7 odd points on the board. As far as the technical parameter is concerned the hurdle of 5100 is still not cleared on closing basis. Secondly, the hourly MACD has given a sell signal near 61.8% retracement area of the entire fall, so the overall sentiment still stands in the corner of the bears with 5100 and 5175 acting as a crucial hurdles going ahead. On downside 5045 is the key support below which the slide can deepen upto 4996 in the coming session.

BSE Realty:

Buying was witnessed in the BSE Realty index and it outperformed the broader market and finally closed at 3399 with a gain of 2.50%. On the daily degree the index has broken above the bearish trendline and successfully managed to close the supply line, indicating further bullishness in the index henceforth. Thus now in the coming days it will test 3471 which is the weekly swing high and should now get tested and remains a crucial short term decider. However if the above mentioned level is breached then expects targets in the region of 3600.

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Regards,

Emkay Research

Emkay Global Financial Services Ltd.

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E-mail: emkayresearch@emkayglobal.com

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