Fw: Sharekhan's top SIP fund picks

  

 

Mutual Gains [For April 04, 2012]  Sharekhan www.sharekhan.com

Summary of Contents MUTUAL GAINS Sharekhan's top SIP fund picks Large-cap funds Multi-cap funds Franklin India Bluechip ICICI Prudential Discovery Fund - IP DSP BlackRock Top 100 Equity Fund Tata Dividend Yield Fund Birla Sun Life Top 100 Fund Birla Sun Life Dividend Yield Plus Tata Pure Equity Fund UTI Opportunities Fund UTI Top 100 Fund Quantum Long-Term Equity Fund BSE Sensex BSE 500 Mid-cap funds Tax saving funds SBI Magnum Sector Funds Umbrella - Emerg Buss Fund  Franklin India Taxshield IDFC Premier Equity Fund - Plan A Reliance Tax Saver (ELSS) Fund DSP BlackRock Small and Midcap Fund ICICI Prudential Taxplan Kotak Midcap Fund HDFC Long Term  Advantage Fund Franklin India Prima Fund HDFC Taxsaver BSE Midcap S&P Nifty Fund focus IDFC Premier Equity Fund   Click here to read report: SIP fund picks   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

Fw: Investor's Eye: Update - Unity Infraprojects; Special - Q4FY2012 Banking earnings preview, Q4FY2012 IT earnings preview; MF - Sharekhan's top SIP fund picks

 

 

Investor's Eye [April 04, 2012]  Sharekhan www.sharekhan.com

Summary of Contents STOCK UPDATE Unity Infraprojects Cluster: Vulture's Pick Recommendation: Buy Price target: Rs107 Current market price: Rs52 Highest order inflow in FY2012 Key points  FY2012 records the highest order inflow ever: In FY2012 Unity Infraprojects (Unity) bagged fresh orders worth about Rs3,000 crore, the highest order inflow recorded in Unity's history. Of this nearly Rs1,300 crore came in Q4FY2012 wherein the company bagged two road build-operate-transfer (BOT) projects worth Rs840 crore. The company is also the lowest bidder (L1) in orders worth Rs770 crore that are likely to be announced over the next two to three months. The current order book stands at about Rs4,650 crore, 2.5x its FY2012E revenue. The management has further set a target of winning orders worth Rs5,000-5,500 crore for FY2013.  Wins 3 BOT projects in its maiden year: Unity marked its entry into the road BOT segment in FY2012 itself by bagging a project for two-laning of the Chomu to Mahla in Rajasthan in Q1FY2012. The project is worth Rs198 crore and has been awarded by the Public Works Department (PWD), Rajasthan on a toll basis. Last week Unity also won two more road BOT (toll-based) projects. The first is the four-laning of Punjab/Haryana border to Jind section of NH-71, for a concession period of 27 years from the National Highways Authority of India. The order is worth Rs510 crore. The second is a project to develop and operate the Suratgarh-Sriganganagar section of NH-15 in Rajasthan for a concession period of 11 years from PWD, Rajasthan. The order is valued at Rs330 crore. This takes the road BOT portfolio of Unity to three projects, which are together worth Rs1,040 crore. Of these, two are in Rajasthan and one is in Punjab. Over the next two years, these three projects will add substantially to the engineering, procurement and construction revenues of Unity after which these will start generating toll revenues. Of the three projects the Chomu-Mahla project is expected to get financial closure in one to two months. Bangalore and Nagpur likely to get launched in Q1FY2013: The company is awaiting approvals for the Bangalore real estate project, which is expected to be launched in this quarter. With regards to the Nagpur project, it is awaiting the final shareholder agreement and the operation and management agreement with one hotel operator. So both the projects are in the pipeline and will hopefully be announced in Q1FY2013. Strong order inflow strengthens the management guidance: The robust order inflow during FY2012 has strengthened Unity's order book to ~Rs4,650 crore, which is to be executed over 20-30 months. Such a strong order book strengthens the management's FY2013 guidance for a 20-25% growth in the top line. The management has further reiterated its aim of maintaining the operating profit margin at 13.5-14%. Attractive valuations, maintain Buy: We continue to like the company, given the strong momentum in its order inflow and its healthy lowest bidder position despite an adverse macro-economic environment. Such robust order wins will translate into a strong revenue growth over the next two years. We expect a 20% compounded annual growth rate in its revenue over FY2012-14. Hence, we maintain our Buy recommendation on the stock with a price target of Rs107. We have not considered the road BOT projects and the real estate projects in our valuation; these would provide further upside. We would include the real estate projects in our valuation once these get launched as their launch has been delayed substantially so far. We would include the BOT projects in our valuation once these are financially closed. At the current market price the stock is trading at a price/earnings multiple of 2.9x FY2013E earnings and at a price/book value of 0.2x FY2013E book value. SHAREKHAN SPECIAL Q4FY2012 Banking earnings preview Key points Earnings growth to trend down: We expect banks in our coverage universe to report an earnings growth of 11.3% year on year (YoY; ex State Bank of India [SBI]) compared with the 12.6% growth in Q3FY2012 and the 15.3% increase in Q2FY2012. On a quarter-on-quarter (Q-o-Q) basis the earnings are expected to grow 6% compared with the 10% Q-o-Q growth in Q3FY2012. This would be on account of a sequential drop in the margin and a higher provisioning. NII growth steady but could drop in the coming quarters: The net interest income (NII) of the banks under our coverage is expected to grow at 22% YoY (13.4% YoY ex SBI) compared with the 17.1% growth in Q3FY2012 and the 19.4% growth in Q2FY2012. The advances growth would be better on a sequential basis but remain sluggish for FY2012. The net interest margin (NIM) could decline by 5-15 basis points quarter on quarter (QoQ) and affect the NII growth. Asset quality pressure to continue: The asset quality pressure will continue due to slippages from agriculture, small and medium enterprise (SME) and certain corporate accounts. Further, the additional restructuring carried out during Q4FY2012 will keep the provisioning at elevated levels. Prefer exposure to private sector banks and select PSBs: We expect the private sector banks to report a relatively better performance (an NII growth of 19% YoY and a net profit growth of 19.3%) with lesser asset quality strain. We prefer ICICI Bank, Axis Bank and Allahabad Bank (as play on Q4 results). Valuations and outlook: The operating performance of banks remains reasonably healthy as higher NIM compensated for a slower growth in advances. However, the earnings will be subdued due to the rise in the credit cost and a sluggish growth in the non-interest income. The margins of banks may come off by 5-15 basis points driven by a rise in the cost of funds which could affect the growth in the NII in the coming quarters. The banking stocks have appreciated from the lows of Q3FY2012 and are trading at a marginal discount of their five-year mean valuations. Going ahead, the timing and magnitude of the RBI's rate cuts will be the key driver of valuations. We prefer private sector banks like ICICI Bank and Axis Bank, and Allahabad Bank (as play on the Q4 results) among the PSBs.   Q4FY2012 IT earnings preview Key points Weak volume growth: The March quarter is the period when the information technology (IT) budgets for the calendar year are finalised. The quarter also has the benefit of a higher number of working days compared with the December quarter. However, this time round, the March quarter saw the impact of a delay in decision making on discretionary spends that led to lower volumes. Therefore, we expect the top four IT companies to report another weak performance in terms of revenues for the quarter ended March 2012. However, on the back of an improving demand environment, as indicated by the recent Accenture and Oracle results, we expect the volumes to pick up in the June 2012 quarter. For the March 2012 quarter, we expect the average sequential revenue growth in dollar terms to be 1.7% against 2.6% in the previous quarter led by a weak volume performance. The adverse impact of the cross-currency movement would be marginal at 25-50 basis points. The rupee that had been the savior in the December 2011 quarter appreciated in the March 2012 quarter. On an average, the rupee appreciated by 2% quarter on quarter (QoQ) against the dollar. In Indian Rupee (INR) terms, we expect the sequential revenue growth to be flat on an average against the 13.3% quarter-on-quarter (Q-o-Q) growth in the previous quarter. Under our mid-cap coverage, Polaris Financial Technology (Polaris) and NIIT Technologies (NIIT Tech) are likely to report flat revenues and a growth of around 9.7% QoQ respectively in dollar terms for the March quarter. Polaris had the benefit of a large licence revenue in the previous quarter which would not be there in the quarter under review.  Margins likely to fall: The operating profit margin (OPM) in the December 2011 quarter had seen a benefit of 150-200 basis points due to the rupee's depreciation. This benefit would not be there in the current quarter. Also, the weak volumes would affect the margins in the March 2012 quarter. We expect Infosys and Tata Consultancy Services (TCS) to witness a larger fall in their margins. We expect TCS to report a 200-basis-point sequential drop in its margins followed by Infosys whose margin should contract by 167 basis points. Wipro and HCL Technologies (HCL Tech) are expected to report a fall of 81 basis points and 85 basis points in their margins respectively. On the other hand, we expect the marked-to-market (MTM) losses on foreign exchange (forex) covers to be lower in this quarter due to the rupee's appreciation in this period. On the net profit front, we expect Infosys and TCS to report a sequential fall whereas HCL Tech is expected to report a flat performance. Wipro is likely to report a sequential growth mainly on the back of higher other income.  Infosys' guidance and management commentary remain the key: The Infosys guidance for FY2013 and the management commentary on the demand environment and the spend/budget ratio remain the key. TCS has hinted at an improvement in decision making towards the end of the quarter. The recent Accenture and Oracle results have also indicated at an improving demand environment. We expect Infosys' initial revenue growth guidance for FY2013 to be at lower double digits in line with the National Association of Software and Services Companies (Nasscom)' expectation of an 11-14% growth in IT services exports for FY2013. Further, comments on the overall pricing environment and hiring plans (campus and lateral mix) would be the key monitorables.  Valuations: Over the last three months, the BSE IT Index has underperformed the BSE Sensex with a return of 6.3% against the Sensex' return of 13.9% as the rupee has been volatile with an appreciating trend. There are still some fears of slow decision making and watchful outlook on the demand environment. However, the recent Accenture and Oracle results have indicated the demand environment is improving indicating the return of volume growth in the June 2012 quarter. We believe that in the upcoming earnings season management commentaries (as against the quarterly numbers) will provide a clear direction to the market. We remain cautiously optimistic on the IT sector and our top IT picks remain TCS in the large-cap space and NIIT Tech in the mid-cap space. MUTUAL GAINS Sharekhan's top SIP fund picks Large-cap funds Multi-cap funds Franklin India Bluechip ICICI Prudential Discovery Fund - IP DSP BlackRock Top 100 Equity Fund Tata Dividend Yield Fund Birla Sun Life Top 100 Fund Birla Sun Life Dividend Yield Plus Tata Pure Equity Fund UTI Opportunities Fund UTI Top 100 Fund Quantum Long-Term Equity Fund BSE Sensex BSE 500 Mid-cap funds Tax saving funds SBI Magnum Sector Funds Umbrella - Emerg Buss Fund  Franklin India Taxshield IDFC Premier Equity Fund - Plan A Reliance Tax Saver (ELSS) Fund DSP BlackRock Small and Midcap Fund ICICI Prudential Taxplan Kotak Midcap Fund HDFC Long Term  Advantage Fund Franklin India Prima Fund HDFC Taxsaver BSE Midcap S&P Nifty   Fund focus Click here to read report: Investor's Eye IDFC Premier Equity Fund Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.

Fw: ValueGuide: Pressure of policy and politics

  

Sharekhan ValueGuide [April 04, 2012]  Sharekhan www.sharekhan.com

Summary of Contents EQUITY FUNDAMENTALS THE STOCK IDEAS REPORT CARD FROM SHAREKHAN'S DESK Pressure of policy and politics  After the smart gains initially this year, the equity market has hit the roadblocks of policy inaction and political logjam. Given the pressure from the 2Ps, policy (or lack of it) and politics, the sentiments have taken a hit and the market is unable to sustain its momentum. The domestic support was limited and the rally was driven by foreign inflows. However, the recent developments have spooked foreign investors and foreign fund flows have dwindled lately. SHAREKHAN TOP PICKS Sharekhan top picks  STOCK IDEA Kalpataru Power Transmission: Concerns priced in, growth ahead SHAREKHAN BUDGET SPECIAL  Union Budget 2012-13: Right on intent, low on action The Union Budget 2013 reflects another instance of the government's indecisiveness on critical policy issues. In his speech, the finance minister acknowledged that there is a need to achieve fiscal consolidation, curtail subsidy burden and revive private investments but he did little in terms of policy action to address the same. The budget proposes steps to boost revenues by rolling back fiscal stimulus (a 2% hike in both the excise duty and the service tax rate) and expresses intent to limit the subsidy bill to 2% of the gross domestic product (GDP; against 2.5% in FY2012). But there is no clear roadmap of the action needed to achieve the same. One senses that the government's focus has been on the safe passage of the finance bill and that the measures to cut down subsidy burden and to achieve the targeted fiscal consolidation will follow suit post budget. On the whole, the finance minister in this budget has set more realistic targets than he had in the previous year but he has missed out perhaps the last opportunity before the general election to take bold policy decisions.  RAILWAY BUDGET SPECIAL  Rail Budget 2012-13: Populism avoided, positive cue for Union Budget Contrary to expectations, the Railway Budget 2012-13 avoided populism and hiked passenger fares after a gap of ten years. The passenger fare hike has come on the back of a substantial increase in the freight rates effected just prior to the budget. The railway minister also detailed an extensive plan to invest a huge sum in expansion and modernisation of the railway network over the next five years and sought additional budgetary support for the same. He has set an ambitious five-year target to improve the operational ratio to 74% from the 95% revised estimate for FY2011-12. On an overall basis, the railway budget suggests that the apprehension of a hugely populist Union Budget after the Congress Party's debacle in the Uttar Pradesh assembly election has been allayed for now. However, there is strong opposition to the passenger fare rate hike from the railway minister's party and leaders.   STOCK UPDATE Aditya Birla Nuvo: Bullishness continues Bharti Airtel: Read through MTN results for Bharti CESC: Another tariff hike to set the outlook positive GlaxoSmithKline Consumer Healthcare: Annual report review Godrej Consumer Products: Price target revised to Rs547 ITC: Price target revised to Rs250 Jaiprakash Associates: New orders in bag, execution a key challenge  Mahindra & Mahindra: Tractor production cut in March 2012 Orbit Corporation: Timely clearances of projects hold the key Provogue India: Price target revised to Rs35 PTC India: Tariff hike and policy reforms the key to future growth  Reliance Industries: Price target revised to Rs890 Tata Consultancy Services: Short term hiccups, business fundamentals remain strong United Phosphorus: Price target revised to Rs167 SHAREKHAN SPECIAL Monthly economy review SWITCH IDEA Shift from Alok Industries to Raymond SECTOR UPDATE Banking: RBI caps LTV for gold loans - Negative for Mannapuram and Muthoot Pharmaceuticals: Budget 2013 is net negative for pharma players Power equipment: NTPC order - BGR shines, BHEL gets fair share, L&T misses yet again VIEWPOINT Anil: Well placed to cash in on the potential opportunity Bharat Forge: Robust business; wait for better entry point Liberty Phosphate: Subsidy reduction not to hurt volume growth  Rama Phosphates: In for good times Tech Mahindra: Tech Mahindra and Mahindra Satyam merger finalised  EQUITY TECHNICALS  Sensex: Consolidation to continue  EQUITY DERIVATIVES  Derivative view: The rollover game  COMMODITY FUNDAMENTALS  Macro-economy Crude oil: Likely to fall further on easing Iran tensions Precious metals: Weighed down by slowdown, uncertainty regarding quantitative easing Base metals: Can fall further Major economic events in April 2012   COMMODITY TECHNICALS  Gold: Down trend intact Silver: Targeting the low Light sweet crude oil: Bears take control Copper: Probability in favour of bears NG: Leaks through the channel Nickel: Near the neckline  CURRENCY FUNDAMENTALS  Currency market: Asian currencies mostly lower INR-USD CMP: Rs51.22 INR-GBP CMP: Rs81.96 INR-EUR CMP: Rs68.27 INR-JPY CMP: Rs62.36  CURRENCY TECHNICALS  USD-INR: Bears warmed up GBP-INR: Near key resistances EUR-INR: Pressure building up JPY-INR: Pattern suggests downside  PMS DESK Sharekhan PMS funds: Fund manager's view and product performance ProPrime-Top Equity ProPrime-Diversified Equity ProTech-Diversified ProTech-Nifty Thrifty ProTech-Trailing Stops  ADVISORY DESK  Monthly performance of Advisory products Smart Trades Derivative Trades MID Trades  MUTUAL FUNDS DESK  MF PICKS Sharekhan's top mutual fund picks (equity)  Sharekhan's top SIP fund picks  EARNINGS GUIDE   Click here to read report: Sharekhan ValueGuide Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.