22
Afternoon Despatch & Courier
BUSINESS
www.afternoondc.in
MUMBAI | FRIDAY, JUNE 28, 2013
TOP VIEW
"We have approached RBI and hopefully having met all the conditions of RBI, an in-principle approval might be given. If it is given, I think, it will be a revolutionary step because it will bring banking, subject to Cabinet approval, to the doorstep of the ordinary man in this country," Telecom and IT Minister Kapil Sibal after the Dept of Post submitted its application for a licence to offer banking services.
SKP Securities calls a ‘Buy’ on VA Tech Wabag CMP: Rs. 458 Target Rs. 649
Markets Flare
NSE India: CNX Nifty — Daily Market Report for: Friday (June 28, 2013) (Based on the activity of the previous trading day) by Dominic Rebello PEVIEW OF THE PREVIOUS DAY: The Nifty rose substantially on Thursday (June 27, 2013) a net 93.65 points (1.68%) and closed at the 5682 point level. The market opened up with a gap at the 5647 points level. It then turned into a range bound movement until 12.01 p.m. The index then declined by a few points and registered the day’s low at the 5630 points level at 12.12 p.m. It then rose sharply and registered the day’s high at the 5699 points level at 2.56 p.m. The index then declined marginally and turned into a range bound movement until closing at the day. The Nifty remained above its previous close throughout the session, moved in a range of 68 points and closed above the psychologically important 5600 points level. Sentiment was extremely bullish and amongst the 50 Nifty stocks 39 were gainers, 10 were losers and 1 remained unchanged. All the sectoral indices barring consumer durables and capital goods closed in the green. Heavy buying was seen in IT, technology, healthcare and realty stocks. TECHNICAL ANALYSIS: Volume: Volume (Qty shares) increased 30.61%. This change is substantial and indicates a wide participation by investors.
Market Breadth: Overall Market Breadth on the NSE was positive. Amongst all the traded stocks, 728 were gainers, 640 were losers and 65 remained unchanged.
Slow Stochastic Indicator: The Slow Stochastic Oscillator has risen in the over-sold zone. The Slow K line in the Stochastic Oscillator has risen above the slow D line (positive and a buy signal). RSI Indicator: The RSI rose and crossed above the 40 level and is now rising (positive if it continues).
MACD Indicator: The MACD is below zero but is now rising (positive if it continues). It is below its 9-day Average (negative).
ADX Indicator & DI Lines: The +DI line is below the –DI line but both lines are converging (positive if it continues). The ADX is flat while the Market Index is rising. No signal here.
Support Levels: For short-term traders the immediate main support is at the 5478 points level. The next support is at the 5408 points level.
Resistance Levels: The immediate main resistance is at the 5814 points level.The next resistance is at the 5965 points level.
Pivot Point Analysis: For intra-day traders the support and resistance levels are calculated according to the pivot point theory and are:
Pivot point = 5671 (This is the level where the trend is likely to change during intra-day). Support (1) = 5642; Support (2) = 5602; Resistance (1) = 5711; Resistance (2) = 5739. OUTLOOK FOR TODAY: On Japanese candlestick patterns the index after having formed a black body candle has formed a white body candle on substantially higher volumes. The body of this candle is above and outside the body of the previous candle indicating a range expansion and acceleration. Further, the index has crossed above the 5 day’s moving average. Moreover, the velocity parameters which were negatively trended have now turned neutral. All these indicate a positive bias. However, the index is below the 15, 25 and 200 day’s moving averages, while the 5, 15 and 25 day’s moving averages are negatively trended. Further, the 15 and 25 day’s moving averages are declining. Both these indicate a negative bias. Investors are advised to avoid buying at present levels until a clear reversal signal is visible.
Work with strict stop losses on all positions
MOVING AVERAGES (TREND INDICATORS) The index: Has crossed above its 5-day average (at 5627) Positive. Is below its 15-day average (at 5739) Negative. Is below its 25-day average (at 5847) Negative. Is below its 200-day average (at 5818) Negative.
Overall Market Strength/Weakness: The indicators and oscillators discussed here are indicating a weak market but with a positive bias. Disclaimer: Investment recommendations made in ‘ADC’ are for information purposes only and derived from sources that are deemed to be reliable but their accuracy and completeness are not guaranteed. ‘ADC’ or the analyst/writer does not accept any liability for the use of this column for the buying or selling of securities. Readers of this newspaper who buy or sell securities based on the information in this newspaper are solely responsible for their actions. ‘ADC’ and/or its affiliates and/or employees and/or the author, his company or his acquaintances may have interests/ positions, financial or otherwise in the securities mentioned in this newspaper.
VA Tech Wabag Ltd (WABAG) is an established EPC player in water management space. It offers complete life cycle solutions from project design to installation to operation & maintenance. WABAG is multinational player with presence in India, MENA region, Central & Eastern Europe, China and South East Asia. Majority of its revenues comes from various municipalities. Future Outlook: Topline to grow at CAGR of around 14% between FY13 FY15E on the back of healthy order backlog…: WABAG’s topline grew by 12% to Rs 16.2 bn during FY13 on the back of strong order execution in international markets. The Company has witnessed 27% growth from the international businesses, with the contribution of Rs 5.5 bn. We expect the revenues of the company to grow with a CAGR of around 14% on the healthy order backlog of Rs 42.8 bn. The order book is 2.6x of FY13 revenues. The order book of the company has grown with a CAGR of 15% between FY10-13. 66% of the order books comprise EPC Contracts and rest is O&M contracts. Of the international order book, about 51% is from Austria, 16% from Switzerland, 12% from Romania, 10% from Philippines, 7% from Czech, and balance are others. Recommendation: We have valued WABAG by using discounted free cash flow approach. We recommend BUY rating on the stock with a target price of Rs 649 (40% upside) in 12 months.
Anand Rathi calls a ‘Buy’ on Tata Global Beverages CMP: Rs. 129 Target Rs. 168
Key takeaways: Kenyan tea prices continue to ease: Tata Global Beverages’ international operations, housed in Tetley, comprise 45% of its turnover and 28% of its EBIDTA. A disproportionately large portion of the tea sold by Tetley consists of black tea (~85%), largely sourced from Kenya. Prices of Kenyan black tea have been gradually declining. They eased 20% from a peak of 341 cents/kg to 272 cents in May’13 due to favourable climatic conditions. Because of this, Kenyan black tea production in May’13 was ~38.2m kg (up 115% yoy). This is a positive development for Tetley’s profitability in 1HFY14 as some degree of price-denominated operating leverage is imminent. Indian tea operations stable: While the tea plucking season has begun on a sedate note, the outlook for production in FY14 is fairly stable. The imminent jump in output in FY14 would be balanced by strong demand for black tea on account of re-stocking. For 1QFY14 this should keep prices stable. We expect the company to maintain its FY14 OPM in tea, at 11%, through judicious cost control and timely price hikes. Our take: Despite challenges in several mature international markets, we believe growth will be effected through the focus on value-added products and strategic price increases. Simultaneously, efficiencies should be extracted from the operational setup. At the ruling price of Rs 135, the stock trades at a P/E and EV/EBIDTA of 17.7x and 8.6x respectively, discounting its FY14e figures. We maintain our recommendation to Buy, with a price target of Rs 168.
Sushil Finance calls a ‘Buy’ on Cipla CMP: Rs. 388 Target Rs. 440
Healthy Domestic market recovery with focus on chronic segments coupled with increasing rural presence & MR productivity: Within India, Cipla is a dominant player & enjoys a very strong foothold with chemists and doctors alike and has one of the biggest brand portfolio supported by a field force of ~7,500 MRs. This business which contributed ~45% of its overall revenues (FY13) registered a growth of 14.6% in FY13 after witnessing muted growth for 2 consecutive years. Going forward, this business is expected to be a key earnings driver with the management guiding for a healthy double digit growth in FY14E. With limited addition plans to its current MR strength of 7,500, the focus would be on increasing its MR productivity & its already strong semi urban/rural presence and consistently launching new products (+25/year). We have thereby factored in a 14.2% CAGR between FY12-15E in its domestic formulation business. Outlook & Valuation: With the transition being seen in the domestic business (FY13 growth @14.6%) coupled with sizeable opportunity from high margin products in US + monetization of Seretide inhaler in Europe (launch Sept 2013)+ new ARV tender supplies to SA partner, we believe, Cipla could conservatively grow its sales & earnings at a health pace of 13.4% & 15.6% CAGR over FY12-15E. Further with potential pick up in asset turnover, Medpro synergy kicking in & a healthy balance sheet with strong cash generation ability, we continue to hold a positive view on the stock & change our rating to BUY with a revised target of Rs. 440 (20x FY15E EPS of Rs.22.0). Please send all business and corporate related mails to business@afternoondc.in