Fw: Express Idea: Auto Component Sector; Call Success and Updates: Oil India, Lumax Auto

 

Express Idea: Auto Component Sector - Set to Zoom Indian auto sector after witnessing tough times in the past couple of years is set to see strong revival from H2 FY15. The key drivers for this growth include 1) improvement in consumer sentiment, 2) pause in diesel price hikes, 3) peaking out of interest rates, 4) pick up in industrial and infrastructure activity and finally 5) partial lifting of ban on mining activities. Internationally too, while developing economies in Africa, Middle East and rest of Asia continue to see strong growth, US is showing robust recovery and Europe is showing signs of stability. Such scenario, we believe, provides large business opportunities for Indian Auto Component manufacturers, which over the years have built a strong reputation with domestic OEMs and also globally. The large caps auto component players, on this premise, have seen a strong re-rating in the past few months leading to widening of valuation discount for small players. Here we pick three such stocks viz Banco Products, MM Forgings and Phoenix Lamps. Recommendation Summary Company CMP (Rs) Target (Rs) Upside Exit trigger* (Rs) Banco Products 155 190 22.6% 130 MM Forgings 447 540 20.8% 375 Phoenix Lamps 133 160 20.3% 110 Horizon: 1-3 months * Exit trigger is the price level below which investor should exit position

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Call Success & Update: Oil India Reco Price Rs600, Previous Target Price Rs650, New Target Price Rs720 We had recommended a BUY on Oil India in Q3 FY14 result update released on February 13, 2014 with a price target of Rs550. We extended the target to Rs600 in a call update released on May 14, 2014 and further to Rs650 in a call update released on May 19, 2014. The stock surpassed our target in today's trading session. We advise investors to hold on to their investments in the company as we remain bullish on its future prospects for a target of Rs720.

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Call Success: Lumax Auto Technologies Reco price Rs200, Call Closure price Rs245 We had recommended a BUY on Lumax Auto Technologies in an Express Idea released on Septermber 02, 2014 with a price target of Rs245. The stock surpassed our target in today's trading session yielding 22.5% return in three trading sessions.

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Warm Regards, Amar Ambani

Fw: Equity Eagle Eye: An X wave effect

 

A Sharekhan technical research newsletter | For July 16, 2014 Contents of Eagle Eye PUNTERS CALL An X wave effect The Nifty snaps five-day losing streak. SMART CHART CALLS If you are a positional trader, Smart Charts present the best positional trading calls in the market today.  MOMENTUM SWING  We have renamed Momentum Calls as "Momentum Swing". Needless to say, short-term traders can continue to enjoy market swings by trading in the Momentum Swing calls that come with a time frame of 1 to 5 days. DAY TRADERS HIT LIST  A keen day trader? Look no further for the trading ranges of the stocks that are currently the flavour of the market. INDEX TRIGGERS  With the benchmark indices creating new all-time highs every second day, the time has come for swift trading in indices.  It appears that the benchmark indices have come out from their sideways movement and this will help traders to trade  with a high risk/reward ratio. Keeping this in mind we have come out with a new intra-day product on Nifty and  Bank Nifty named ''Index Triggers''.  Regards, The Sharekhan Research Team www.sharekhan.com

 

Fw: Union Budget 2014-15 - Good to begin with...

 

Union Budget 2014-15: Good to begin with… The most anticipated event after a record election victory is now behind us. Mr. Arun Jaitley's Budget speech evoked confused response with wild swings during and after the Budget presentation. There was a feeling among certain sections of the market that bolder reforms were warranted given the strength of this government's mandate. Akin to the Railway Budget, the details were missed although the broad picture was conveyed reasonably well. Gross tax revenue projection was cut by ~Rs15,000 crore compared to interim Budget numbers - Indirect tax revenue projected to grow by 20.3% yoy and direct tax by 15.7%. While customs and service tax projections appear reasonable, excise duty growth projections at 15.4% appear steep. On the direct tax front, personal income tax projection has been substantially reduced (by Rs22,200 crore) compared to interim Budget, but still appear high. Perhaps, the government expects additional income from advance ruling settlement in case of individual tax-payer disputes. Otherwise, there is a risk of falling short of the tax revenue target set by Rs10,000 crore. Along expected lines, spending on Plan expenditure was substantially increased to support growth. Plan expenditure growth is targeted at 21% to be spent towards agriculture, capacity creation in health and education, rural roads, national highways, rail network expansion, among others. Surprisingly, non-Plan expenditure was not projected to grow at a slower rate than set during the interim Budget. Nevertheless, non-Plan growth is much lower than what is being spent on the Plan side. Subsidies have been pegged at 2% of GDP and only marginally higher than the interim Budget – petroleum subsidy seems to be under control with continued diesel deregulation and assuming gradual increase in LPG and Kerosene prices. Food subsidy target is reasonable but fertilizer subsidy looks under-provided, which could result in a working capital crunch for the sector. On MGNREGA, the minister aims to put this money to more productive us! e. To make up for the 13% yoy growth in total expenditure and Rs9,000 crore shortage in net tax revenue, revenue from economic activities, particularly telecom auctions and other non-tax revenue targets have been raised higher. Non-tax revenue is estimated to be 18% of the total revenue composition, Rs32,000 crore higher than interim Budget numbers. By doing so, the Finance Minister stuck to the fiscal deficit target of 4.1% that his predecessor had set. This is certainly a stretched target and could be missed by 20 basis points. Yet, that would not be seen as an under-achievement. The revenue deficit is pegged at Rs378,248 crore, 2.9% of GDP. With only a few weeks to prepare, the FM announced some important steps like opening up FDI in defence and insurance sectors. Increasing the capital budget for defence by Rs5,000 crore was also an important move. A major step undertaken was to boost financial savings and provide some relief for negative real returns in the economy. As opined in our pre-Budget note, the Minister raised individual tax slabs to Rs2.5 lakhs and also hiked the deduction under Section 80C to Rs1.5 lakhs. To boost savings further, the annual ceiling on PPF was raised and Kisan Vikas Patra and National Savings Certificate with insurance cover, were introduced. The Budget was particularly positive for infrastructure, housing and agriculture. While the FM touched upon the need for capital infusion in PSU banks, the figure of Rs13,400 crore allocated this year was much lesser than Rs15,800 crore the previous year. While banks were asked to lend to infra projects for the long term, it remains unclear whether their long term borrowings attract lower CRR and SLR norms. While end of retrospective taxation was needed to build confidence for investing in India, nothing concrete came in the Budget. The biggest negative from a capital market viewpoint was the increase in rate of long term capital gains (LTCG) in debt mutual funds to 20% and the period for LTCG raised to 3 years instead of 1 year. The Budget lays a broad roadmap for economic recovery and attempts to set in order the accounts, both in terms of deficit and quality of spending. The actual implementation on the ground will propel the economy and the market to a new orbit.

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Warm Regards, Amar Ambani

Fw: Sharekhan Mutual Fund Finder - January 2014

 

Sharekhan Mutual Fund Finder  [November 27, 2013] Sharekhan www.sharekhan.com

Summary of Contents   Top equity picks Top SIP picks SIP calculator Crorepati calculator Fund of the month: Reliance Equity Fund Performance of debt funds and ETFs Sharekhan Mutual Fund Finder Click here to read report: Mutual Fund Finder

Regards, The Sharekhan Research Team

 

Fw: Company Report - Tata Communications - BUY

 

Tata Communications: Gaining ground - BUY CMP Rs294, Target Rs340, Upside 15.8% We interacted with Tata Communications (Tcom) to get its views on voice and data businesses. Company expects wholesale voice (95% ILD) growth of mid to high single digit though it has grown at 12-13% outpacing industry run rate. In wholesale voice, the focus is more on free cash flows rather than EBIDTA margins (which are likely to be 8-8.5% on average) with FY13 FCF of US$120mn. On the data side, historically the business has grown at 15% which can be the trend line along with 20% margin. Notably, if one adjusts for the new initiatives (like ATMs), data margins have much higher potential. Neotel has turned around at EBIT level since Q4 FY13 and Tcom remains in discussion with Vodacom to sell its entire stake in the South African arm; if successful, the deal would remove a key overhang on consolidated profitability. Capex intensity is set to decline as large cable builds are behind which would support cash flows. We tweak our estima! tes and base on an improved outlook upgrade the stock to BUY with revised 9-12mth target of Rs340.

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Warm Regards, Amar Ambani

Fw: Sharekhan's top SIP fund picks

 

 

Mutual Gains [December 10, 2013] Sharekhan www.sharekhan.com

Summary of Contents     MUTUAL GAINS < /font> Sharekhan's top SIP fund picks Large-cap funds Multi-cap funds ICICI Prudential Focused Bluechip Equity Fund - Ret SBI Magnum Global Fund SBI Magnum Bluechip Fund ICICI Prudential Discovery Fund Tata Pure Equity Fund - Plan A Quantum Long-Term Equity Fund Franklin India Bluechip SBI Magnum Multiplier Plus 93 Kotak 50 Tata Equity Opportunities Fund - Plan A BSE Sensex BSE 500 Mid-cap funds Tax saving funds SBI Magnum Mid-cap Fund BNP Paribas Tax Advantage Plan Franklin India Prima Fund SBI Magnum Tax Gain Scheme 93 HDFC Mid-cap Opportunities Fund Tata Tax Saving Fund - Plan A SBI Emerg Buss Fund DWS Tax Saving Fund IDFC Sterling Equity Fund  - Reg HDFC Tax Saver BSE Mid-cap CNX Nifty Fund focus Franklin India Bluechip Fund - Growth Click here to read report: SIP fund picks

 

Fw: Stock Idea - Sun TV Network (Sun rises in the south)

 

 

Stock Idea [December 03, 2013]  Sharekhan www.sharekhan.com

Summary of Contents   STOCK IDEA Sun TV Network Recommendation: Buy Price target: Rs515 Current market price: Rs367 Sun rises in the south  Key points Dominant force, undisputed leader of south India: Sun TV Network (Sun TV) is the undisputed leader in the south Indian entertainment market (Tamil Nadu, Andhra Pradesh, Karnataka and Kerala), India's biggest regional entertainment market with strong viewership market share in the regional broadcasting market (Tamil Nadu: 68%, Andhra Pradesh: 38%, Karnataka: 41%). With 32 out of the total 66 TV channels present in the market, a leading viewership share (it is the leader in three out of the four markets) and a 30% market share of the total south Indian advertisement market, Sun TV enjoys a dominant position in the south Indian broadcasting market. On the other hand, its premium positioning and low-cost de-risked business model have helped the company to maintain a very healthy operating profit margin (OPM) corridor of 70%, EBIT margin of 51% and dividend pay-out of more than 50%.  Digitisation benefits yet to accrue, huge upside potential: Among the key stakeholders of the TV industry, TV broadcasters are expected to be the prime beneficiaries of the mandatory digitisation process initiated by the government. The broadcasters would benefit from higher subscription revenues as the declaration of the increase in the number of subscribers would happen at the least incremental capital expenditure (capex). With the government likely to speed up the process of digitisation in Chennai and the smooth transition in the other key markets (Bengaluru, Hyderabad, Coimbatore, Mysore and Vishakhapatnam) under phase-II, the subscriber base is estimated at 4.77 million. The actual benefits are likely to be seen beyond FY2015 with almost a six-fold increase in the ARPU of the cable subscribers from Rs4 currently to Rs15-20 (post-DAS regime). The full DAS regime will provide incremental potential upside of around Rs650-750 crore to the subscription revenues, driven by (a) an improvement in subscriber reporting (under-reporting is rampant currently); (b) a four- to five-fold increase in the ARPU from the current levels; and (c) an increase in broadcasters' ARPU share with an improvement in subscriber reporting.  Healthy earnings with strong return ratios: We expect Sun TV to deliver a 16% compound average growth rate (CAGR) in the stand-alone top line over FY2013-16, led by a 20% CAGR in the subscription revenues (ex full impact of the digital addressable system [DAS] regime) and an 11% CAGR in advertisement revenues. We have built a margin decline of 140 basis points over FY2013-16 and expect the net income to grow at a CAGR of 15% over FY2013-16. We expect the return on equity (RoE) to improve to 28% by FY2016 and the dividend pay-out to remain healthy at around 53% of the consolidated net income. In our estimates, we have not incorporated the full potential upside from the DAS regime and the profit, if any, from the company's Indian Premier League (IPL) franchisee in FY2015.  Valuation-deserves re-rating, illuminating future prospects: Given the potential improvement in the operating environment in view of the huge upside potential from the DAS regime and a gradual uptick in the advertisement spending, the future prospects for Sun TV, which has a dominant market position and integrated business model with presence over broadcasting, movies and radio, seem to be favourable. On the other hand, despite a change in the political regime and increasing competition, Sun TV has managed to remain the leader in its key market which allays the fear that the company may be losing its dominant position. At the current market price of Rs367, the stock trades at 18.2x, 15.5x and 13.4x based on the earnings estimates for FY2014, FY2015 and FY2016 respectively. At the current levels, the stock is trading at a discount of around 35% to its historical one-year forward price-earning ratio (PER) and that of 33% to Zee Entertainment Enterprises Ltd (ZEEL; which is much higher than the three-year average discount of 16%). Sun TV enjoys an industry-leading margin profile, leadership position in its key market, strong dividend pay-out, and healthy balance sheet and return ratios. Hence, it deserves a much better valuation. We value Sun TV at 21.5x FY2015E earnings, our target multiple is based on a 25% discount to ZEEL. We initiate coverage on Sun TV with a Buy rating and price target of Rs515. Click here to read report: Stock Idea   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.