Indian stock market and companies daily report (April 30, 2012, Monday)

The Indian markets are expected to open in green tracking positive cues from Asian markets.
Globally, U.S. stocks moved mostly higher over the course of the trading day on Friday due to some upbeat earnings news as well as a better than expected reading on consumer sentiment index which came in at 76.4 for April compared to the March’s reading of 76.2. The Commerce Department reported U.S. GDP numbers which increased by 2.2% (expected 2.5%) in the first quarter compared to the 3.0% growth seen in the fourth quarter CY2011. Most European stock markets also closed with weekly gains on Friday, after release of U.S. consumer spending data.
Meanwhile, Indian shares ended another lackluster trading session on as the news of Spain's credit rating and downgrade by S&P prompted investors to take a cautious stance.

Markets Today
The trend deciding level for the day is 17,133 / 5,189 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,244 – 17,353 / 5,224– 5,258 levels. However, if NIFTY trades below 17,133 / 5,189 levels for the first half-an-hour of trade then it may correct up to 17,024 – 16,913 / 5,156 – 5,121 levels.

Result Reviews
ICICI Bank (CMP: Rs.869 / TP: 1,183 / Upside: 36.1%)
ICICI bank delivered an all-round performance during 4QFY2012, both on the operating and asset quality front. The bank’s domestic NIM improved by 27bp qoq, leading to healthy sequential NII growth of 14.5%. The bank’s non-interest income also saw traction during the quarter growing by 17.8% qoq (up 35.8% yoy). The bank’s asset quality also improved during 4QFY2012 with both gross and net NPA levels declining by 2.5% qoq and 9.1% qoq, respectively. Healthy performances overall resulted in net profit for ICICI bank growing by a strong 31.0% yoy to Rs.1,902cr (up 10.0% qoq). We recommend a buy on the stock with a target price of Rs.1,183.
Axis Bank (CMP: Rs.1,121 / TP: 1,587 / Upside: 41.6%)
Axis bank reported a healthy PAT growth of 25.2% yoy (up 15.9% qoq) to Rs.1,277cr, which were ahead of our estimates. The bank’s NIMs declined sequentially on a qoq basis by 20bp, resulting in a lower operating profit than estimated by us. However, the bank surprised positively on the asset quality front with provisioning expenses declining by 67.0% qoq (down 45.2% yoy), resulting in a healthy bottom-line. Both gross and net NPA levels were down sequentially by 5.7% qoq and 30.8% qoq, respectively. We recommend a buy on the stock with a target price of Rs.1,587.
Maruti Suzuki (CMP: Rs.1,397 / TP: 1,510 / Upside: 8.1%)
For 4QFY2012, Maruti Suzuki (MSIL) reported an in-line opearting performance; whereas bottom-line was signifiacntly ahead led by steep increase in other income. Net sales for the quarter registered a strong growth of 17.2% yoy (51.7% qoq) to Rs.11,727cr aided by 4.9% yoy (50.4% qoq) increase in total volumes (led by new Swift and Dzire) and 11.7% yoy (1.4% qoq) increase in net average realisation (driven by superior product mix - higher contribution of diesel vehicles and price increases). On the operating front, EBITDA margins nosedived 281bp yoy to 7.3% largely on account of higher raw-material costs (up ~200bp yoy to 79.6% of sales) due to higher outgo relating to vendor compensation. Employee expenses too increased 66bp yoy impacted by higher variable pay during the quarter. As a result operating profit declined 15.3% yoy Rs.859cr. Net profit however, was down by only 3% yoy to Rs.640cr as substantial increase in other income (up 155% yoy) boosted the profitability.
At Rs.1,397, MSIL is trading at 18x and 13.9x FY2013E and FY2014E earnings, respectively. We maintain our Accumulate rating on the stock with a target price Rs.1,510.

HCC (CMP: Rs.20 / TP: - / Upside: -)
For 4QFY2012, HCC continued its poor performance on the numbers front as expected. On the top-line front, HCC’s revenue declined by 3.9% yoy to Rs.1,156cr against our estimate of Rs.1,022cr. However, it includes ~Rs.166cr (total arbitration award Rs.256cr) of arbitration award, excluding which it would have stood at ~Rs.990cr. EBITDAM came in at shocking 7.6%, a dip of 680bp yoy and lower than our estimate of 11.8%. On the earnings front, HCC reported a loss of Rs.54cr vs. profit of Rs.23cr in 4QFY2011, against our estimate of loss of Rs.23cr owing to lower EBITDA margin and higher interest cost. Interest cost witnessed an increase of 39.4% and 6.3% on yoy and qoq basis respectively. The total outstanding order book stands at Rs.15,336cr (excluding L1 orders of Rs.1,713cr) with dismal order inflow of Rs.1,889cr (decline of ~44% on yoy basis) for FY2012. Owing to concerns such as slowdown in order inflow, high debt and stretched working capital, we remain Neutral on the stock.
Hexaware (CMP: Rs.130 / TP: - / Upside: -)
For 1QCY2012, Hexaware reported a healthy set of results. Major highlights of the results were whopping 6.6% qoq volume growth even in a seasonally soft quarter for IT companies. The USD revenue came in at US$88mn, up 4.7% qoq. In INR terms, revenue came in at Rs.438cr, up 1.5% qoq. The company’s EBITDA and EBIT margins declined by 61bp and 77bp qoq to 22.4% and 20.8%, respectively, majorly due to qoq INR appreciation against USD. PAT for the quarter stood flat qoq to Rs.88cr. Hexaware has been outperforming in the mid-cap space since eight quarters by reporting a scorching 7.7% CQGR. Management has been outperforming its guidance every quarter and has maintained CY2012 yoy USD revenue growth guidance of at least 20%. We expect the company to continue its revenue growth on the back of increasing traction for enterprise services as well as continue its operational exuberance. We value the company at 12x CY2013E EPS of Rs.10.7, which gives us a target price of Rs.128. The stock price has run up significantly and we see limited upside from current levels. We maintain our Neutral rating on the stock.

Result Previews
Bank of India
Bank of India is scheduled to announce its 4QFY2012 results today. We expect the bank to report a decline of 6.5% yoy in net interest income to Rs.2,157cr. The noninterest income of bank is expected to report a moderate growth of 10.4% yoy to Rs.909cr. Operating expenses are expected to decline by 35.0% yoy to Rs.1,251cr (high base due to employee provisioning related to pension) expenses in 4QFY2011), leading to 50.6% yoy growth in PPP. Provisioning expenses are expected to rise by a substantial 76.2% yoy to Rs.842cr, however the net PAT is still expected to increase by a strong 42.6% yoy. We have a buy rating on the stock with a target price of Rs.392.
Dabur
Dabur is slated to announce its 4QFY2012 results. For the quarter, we expect Dabur to post a 17.4% growth in its consolidated Top-line to Rs.1,301cr, driven by both higher volumes and better realizations. The OPMs are expected to contract by 106bp yoy to 17.5% due to input cost pressures. The Bottom-line is expected to register a modest growth of 9.7% yoy to Rs.161cr. We recommend a Neutral on the stock.
Godrej Consumer
Godrej Consumer (GCPL) is slated to announce its 4QFY2012 results. For the quarter, we expect GCPL to post a strong 28.3% yoy growth in its Top-line to Rs.1,283cr, driven by healthy performance from both the domestic and international businesses. The OPMs are expected to remain flat at 17.5%. The Bottom-line is expected to register a growth of 13.0% yoy to Rs.160cr. We maintain a Neutral on the stock.
Exide Industries
Exide Industries (EXID) is slated to announce its 4QFY2012 results today. We expect the top-line to grow by 8% yoy (healthy growth of 6% qoq) to Rs.1,325cr led largely pick up in the OEM sales. On the operating front, EBITDA margin is expected to decline by 425bp yoy to 14.5% on account of price cuts carried out in September 2011 to counter competitive pressures. Hence, bottom line is expected to post a 20% yoy decline to Rs.130cr. The stock rating is under review.
Oriental Bank of Commerce
Oriental Bank of Commerce is scheduled to announce 4QFY2012 results today. The Net Interest Income is expected to grow by a healthy 16.8% yoy (muted 3.9% qoq) to Rs.1,184cr. Non-interest income is expected to increase by 15.8% yoy (17.6% qoq) to Rs.347cr. Operating expenses are expected to increase by 21.5% yoy (decline by 6.0% qoq) to Rs.571cr. While pre-provision profit is expected to increase by 13.8% yoy (16.0% qoq), Provisioning expenses are expected to decline by 39.0% yoy and 10.2% qoq. We expect the net profit of the bank to increase by 25.3% yoy (18.0% qoq) to Rs.418cr. At the CMP the stock is trading at 0.5x FY2014E P/ABV. We recommend Buy on the stock with a Target Price of Rs.296.
Vijaya Bank
Vijaya bank is scheduled to announce 4QFY2012 results. Net interest income is expected to grow at a muted 2.8% yoy (3.6% qoq) to Rs.492cr. Non-interest income is expected to decline by 3.0% yoy (increase by 19.8% qoq) to Rs.139cr. Consequently, the operating income is expected to increase by 1.5% yoy (6.8% qoq) to Rs.630cr. The operating expenses are expected to decline by 36.6% yoy to Rs.324cr on account of higher pension related provisioning in 4QFY2011. Reduction in operating expenses would aid pre-provisioning profit to grow by 178.3% yoy to Rs.306cr. Provisioning expenses are expected to increase by 55.2% yoy to Rs.133cr (decline by 20.4% qoq). Consequently, the net profit is expected to increase by 138.8% yoy (4.0% qoq) to Rs.129cr. At the CMP, the stock is trading at valuations of 0.7x FY2014E ABV. We recommend Neutral on the stock.
KPIT
KPIT Cummins Infosystems (KPIT) is slated to announce its 4QFY2012 results today. We expect the company to post revenue of US$95.8mn, up 30.4% aided by revenues coming in from Systime acquisition. In rupee terms, the revenue is expected to come in at Rs.481cr, up 27.0% qoq. EBITDA margin is expected to expand to remain almost flat qoq at 15.4% as Systime had EBITDA margin in single digits. PAT is expected to come in at Rs.38cr. We maintain Accumulate rating on the stock with a target price of Rs.98.

Economic and Political News
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