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Tuesday, January 16, 2007

Citigroup - UTI Bank

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Google Groups Issue

We seem to have prolonged issues with Google groups resulting in broken downloads. Hope they can get around these bugs really soon.

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Kotak - TCS

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Emkay - Automative Axles + RPG Transmission

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Results Calendar - Jan 19 2007

Jan 19 2007 ABC Bearings Ltd
Jan 19 2007 Aftek Ltd
Jan 19 2007 Asian CERC Information Technology Ltd
Jan 19 2007 Bharat Immunological & Biological Corporation Ltd
Jan 19 2007 Dhruv Estates Ltd
Jan 19 2007 Infotech Ltd
Jan 19 2007 Entertainment Network (India) Ltd
Jan 19 2007 Godawari Power & Ispat Ltd
Jan 19 2007 Gowra Leasing & Finance Ltd
Jan 19 2007 Granules India Ltd
Jan 19 2007 Gujarat Narmada Valley Fertilisers Company Ltd
Jan 19 2007 High Energy Batteries (India) Ltd
Jan 19 2007 Hindustan Construction Company Ltd
Jan 19 2007 I-Flex Solutions Ltd
Jan 19 2007 Ind Tra Deco Ltd
Jan 19 2007 India Gelatine & Chemicals Ltd
Jan 19 2007 J.K.Investo Trade (India) Ltd
Jan 19 2007 Jain Irrigation Systems Ltd
Jan 19 2007 Jolly Board Ltd
Jan 19 2007 Kabra Extrusion Technik Ltd
Jan 19 2007 Lakshmi Energy & Foods Ltd
Jan 19 2007 Lynx Machinery & Commercials Ltd
Jan 19 2007 M M Forgings Ltd
Jan 19 2007 Mangalam Timber Products Ltd
Jan 19 2007 Midpoint Software & Electro Systems Ltd
Jan 19 2007 Mipco Seamless Rings (Gujarat) Ltd
Jan 19 2007 NIIT Ltd
Jan 19 2007 Nivi Trading Ltd
Jan 19 2007 Omega Interactive Technologies Ltd
Jan 19 2007 Orient Ceramics & Industries Ltd
Jan 19 2007 PNB Gilts Ltd
Jan 19 2007 Ponni Sugars (Erode) Ltd
Jan 19 2007 Porritts & Spencer (Asia) Ltd
Jan 19 2007 PTC India Ltd
Jan 19 2007 Ramkrishna Forgings Ltd
Jan 19 2007 Rishabh Digha Steel & Allied Products Ltd
Jan 19 2007 Sanjay Leasing Ltd
Jan 19 2007 Shringar Cinemas Ltd
Jan 19 2007 Shyam Star Gems Ltd
Jan 19 2007 Silverline Technologies Ltd
Jan 19 2007 Sonata Software Ltd
Jan 19 2007 State Bank of Bikaner and Jaipur
Jan 19 2007 Taparia Tools Ltd
Jan 19 2007 Tata Teleservices (Maharashtra) Ltd
Jan 19 2007 Texmaco Ltd
Jan 19 2007 Torrent Gujarat Biotech Ltd
Jan 19 2007 Ushdev International Ltd
Jan 19 2007 Welcast Steels Ltd
Jan 19 2007 Zensar Technologies Ltd

Results Calendar - Jan 18 2007

Jan 18 2007 ABM Knowledgeware Ltd
Jan 18 2007 Asia Fab Ltd
Jan 18 2007 Austin Engineering Company Ltd
Jan 18 2007 Bhagyanagar India Ltd
Jan 18 2007 Bharat Bijlee Ltd
Jan 18 2007 Bharat Seats Ltd
Jan 18 2007 Bihar Caustic & Chemicals Ltd
Jan 18 2007 Biocon Ltd
Jan 18 2007 BOC India Ltd
Jan 18 2007 Chowgule Steamships Ltd
Jan 18 2007 Daikaffil Chemicals India Ltd
Jan 18 2007 ECE Industries Ltd
Jan 18 2007 EMCO Ltd
Jan 18 2007 Futuristic Securities Ltd
Jan 18 2007 Genus Overseas Electronics Ltd
Jan 18 2007 Godavari Fertilizers & Chemicals Ltd
Jan 18 2007 Greycells Entertainment Ltd
Jan 18 2007 Gujarat State Petronet Ltd
Jan 18 2007 Howard Hotels Ltd
Jan 18 2007 Indo Rama Textiles Ltd
Jan 18 2007 Ion Exchange (India) Ltd
Jan 18 2007 Ispat Profiles India Ltd
Jan 18 2007 Jhunjhunwala Vanaspati Ltd
Jan 18 2007 JK Lakshmi Cement Ltd
Jan 18 2007 Kirloskar Electric Company Ltd
Jan 18 2007 KPIT Cummins Infosystems Ltd
Jan 18 2007 Marathwada Refractories Ltd
Jan 18 2007 Moschip Semiconductor Technology Ltd
Jan 18 2007 Mukesh Babu Financial Services Ltd
Jan 18 2007 OCL India Ltd
Jan 18 2007 Padam Cotton Yarns Ltd
Jan 18 2007 Panacea Biotec Ltd
Jan 18 2007 Peoples Investment Ltd
Jan 18 2007 Plethico Pharmaceuticals Ltd
Jan 18 2007 Pulsar International Ltd
Jan 18 2007 Rathi Ispat Ltd
Jan 18 2007 Reliance Natural Resources Ltd
Jan 18 2007 Riddhi Siddhi Gluco Biols Ltd
Jan 18 2007 S & S Power Switchgear Ltd
Jan 18 2007 Sagar Systech Ltd
Jan 18 2007 Seshasayee Paper & Boards Ltd
Jan 18 2007 Shasun Chemicals & Drugs Ltd
Jan 18 2007 Shree Cement Ltd
Jan 18 2007 Singer India Ltd
Jan 18 2007 Softpro Systems Ltd
Jan 18 2007 Sona Koyo Steering Systems Ltd
Jan 18 2007 State Bank of Mysore
Jan 18 2007 Surana Telecom Ltd
Jan 18 2007 Tai Industries Ltd
Jan 18 2007 Tech Mahindra Ltd
Jan 18 2007 TVS Finance & Services Ltd
Jan 18 2007 UltraTech Cement Ltd
Jan 18 2007 Unichem Laboratories Ltd
Jan 18 2007 Veejay Lakshmi Engineering Works Ltd
Jan 18 2007 VST Industries Ltd
Jan 18 2007 Webel Sl Energy Systems Ltd
Jan 18 2007 Zuari Industries Ltd

Results Calendar - Jan 17 2007

Jan 17 2007 3i Infotech Ltd
Jan 17 2007 Adinath Exim Resources Ltd
Jan 17 2007 Alembic Ltd
Jan 17 2007 Alps Industries Ltd
Jan 17 2007 Dover Securities Ltd
Jan 17 2007 Eimco Elecon (India) Ltd
Jan 17 2007 Gujarat Borosil Ltd
Jan 17 2007 Infotech Enterprises Ltd
Jan 17 2007 Keltech Energies Ltd
Jan 17 2007 Kirloskar Oil Engines Ltd
Jan 17 2007 Madan Financial Services
Jan 17 2007 Mukunda Industrial Finance Ltd
Jan 17 2007 New Delhi Television Ltd
Jan 17 2007 NIIT Technologies Ltd
Jan 17 2007 Orind Exports Ltd
Jan 17 2007 S Kumars Online Ltd
Jan 17 2007 Savant Infocomm Limited
Jan 17 2007 Shree Digvijay Cement Co. Ltd
Jan 17 2007 Sterling Tools Ltd
Jan 17 2007 Tata Metaliks Ltd
Jan 17 2007 Wipro Ltd

Close: Ranged markets look for direction !

Indian Indices displayed ranged action for the day but it closed in red. Selling was seen in some index heavy weights whereas others saw recovery. Selective Mid and Small Caps saw action as is the case ahead of results season. Sectors like Metals, Auto Ancillary, Banks (PSU), Power and Fertilizer came in for profit taking. Cement stocks were the gainers on the back of some superb results by some small companies. Asian Markets ended mixed and European Markets too are showing ranged action.

Sensex closed down by 15 points at 14114.73. Weighing on the Sensex were losses in HDFC (1559.9,-2 percent), Hindalco (169.95,-1 percent), RIL (1347,-1 percent), Infosys (2217,-1 percent) and SBI (1209.25,-1 percent). Losses were restricted by gains in BHEL (2258.7,+2 percent), ACC (1101.4,+2 percent), Wipro (636.85,+2 percent), L & T (1520.25,+1 percent) and Bharti Tele (670.45,+1 percent).

The Bank of Japan is set to decide on interest rates over the next two days. A hike will be taken negatively. Today the banks saw some selling pressure. The news came later. The Government has hiked the ECB ( external commercial borrowing) limit from $ 18 bn to $ 22 bn. This means that corporates will find it easier to raise resources globally. This is bad news for the Indian Banks which are still facing a resource crunch.

Hyundai Motors has slashed the price of its compact hatchback Getz by Rs 21,000 to Rs 399,000 bringing it in line with Maruti's Swift and General Motor India's Chevrolet U-VA. The Getz was originally launched in 2004 at Rs 450,000 for the base model. Hyundai's move is aimed at working up the Getz's volumes which have failed to go past the 1,500-unit-a-month mark, while the Swift launched later in 2005 sells nearly 5,000 units a month. To boost Getz sales, Hyundai is also planning to launch a diesel version by the end of this calendar year while rival Maruti will launch the diesel Swift by the end of this month. The compact segment is seeing the competition increase. We are positive on Maruti with its expansions expected to kick in and the fact that this Swift Diesel will be the serious attempt by Maruti to get into the Diesel segment. However for now the cut in Prices by competition will put pressure. Stock closed marginally up and its peer Tata Motors also closed up by 1.2%.

Rajesh Exports announced that it has set up the world's largest jewellery manufacturing facility at Whitefield, Bangalore. The company plans to launch it's own retail stores across India. The stores are being launched under the brand name of 'Laabh Jewellers', which would carry Indian jewellery of the highest design consistency, absolute guarantee in terms of gold purity and at a fair and an affordable price. The company has developed an exclusive range of 3,000 individual jewellery designs. This exclusive range is now available at `LAABH` stores. `Laabh` is set to unvei its national presence in 23 cities across India. It is India`s single largest simultaneous launch of jewellery stores across the country. `Laabh Jewellery` started 30 exclusive jewellery stores in 23 cities across the country. In the first phase `Laabh Jewellers` has been launched mainly in the state capitals with presence in most of the major states of the country. It would be subsequently expanding its presence in the tier II cities in the next round of expansion. `Laabh Jewellers` would also be upgrading its product line in the near future by introducing gold coins and diamond studded jewellery. There would also be constant scientific up gradation of the existing gold jewellery line on a monthly basis. The stock was locked at 5% upper circuit.

The most expected result for the day; Bajaj Auto declared good results for Q3 with Net Profit at Rs 345 cr up by 23% and sales at Rs 2568 cr up by 27%. The market share increased to 35% from 30%. The stock made an intraday high of Rs 2850 and closed marginally up for the day. It was however volatile post the results as the mood remained unsure whether the performance warranted a run up. The competitive pressures are high. Expect a research note on this tomorrow. Bajaj is our best bet in the two wheeler sector. However we believe that opportunities will be available at lower levels given the competitive scenario as the biggies battle it out for the consumers pocket.

Technically Speaking: It was a choppy session for the whole day before closing. Sensex touched intraday high of 14211 and low of 14070. Market turnover stood good at Rs 3976 cr. Overall breadth was almost same where advancers stood at 1334 and Decliners at 1321. The Resistance level was at 14190 -14271 while Support at 14050 -13990 levels.

FII & MF Figures

FII Gross purchases Rs 2610.70 Cr Gross Sellers Rs 2849.60 Cr Net Sellers Rs 238.90 Cr.
MF Gross Purchases Rs 553.28 Cr Gross Sellers Rs 449.77 Cr Net Buyers Rs 103.51 Cr.

Our View:

Thats a big negative.. FIIs have not been buyers and that is likely to weigh on sentiment. FIIs still impact sentiment and this negative will have its impact..

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Citigroup - Reliance Industries

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Citigroup - India Equity Strategy

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Goldman Sachs - India Financial

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Marginal losses

In a listless trading session, the market displayed a range-bound trend with select bouts of buying and selling. The Sensex began the trading session with a positive gap of 16 points and moved up to touch an all-time high of 14211. The market soon lost ground and slipped below the 14100 mark to touch the day's low of 14071. The mood remained sluggish in the afternoon with a negative bias. The Sensex ended the session with marginal losses of 15 points at 14115. The Nifty was up two points and closed at 4080. Of the 2,673 stocks traded on the BSE, 1,289 stocks declined, 1,335 stocks advanced and 49 stocks ended unchanged.

Among the sectoral indices the BSE CG index advanced 1.02%. The BSE Auto index, the BSE CD index and the BSE Bankex were marginally in positive territory. On the other hand the BSE Metal index shed 1.17%. The BSE Oil & Gas index, the BSE PSU index, the BSE FMCG index, the BSE HC index and the BSE IT index finished in negative territory.

Among the major losers HDFC slipped 2.27% at Rs1,560, Hindalco shed 1.48% at Rs170, Reliance declined 1.29% at Rs1,347, Infosys was down 1.16% at Rs2,217 and SBI closed weaker by 1.04% at Rs1,209. However BHEL soared 1.67% at Rs2,259, ACC surged 1.61% at Rs1,101, Wipro added 1.55% at Rs637, L&T was up 1.37% at Rs1,520, Bharti Airtel gained 1.35% at Rs670, Tata Motors advanced 1.18% at Rs958 and Satyam Computers gained 1.04% at Rs506.

Lumax Auto Technology made its debut on the BSE today. The stock opened at Rs75 and touched and intra-day high of Rs142.10. The scrip closed at Rs110.60, up 46% from its opening price.

Banco Products at Rs344.15, Bhushan Steel at Rs414, SAIL at Rs101.10, Flex Industries at Rs234.85, Mysore Cement at Rs71.75 and Rain Commodities at Rs208 touched new all-time highs on the BSE.

Over 4.15 crore IFCI shares changed hands on the BSE followed by Reliance Natural Resources (3.58 crore shares), Harig Cranks (1.10 crore shares) and Aftek (99.39 lakh shares).

Value-wise TCS clocked a turnover of Rs66.92 crore on the BSE followed by Bajaj Auto (Rs53.32 crore), Reliance Communication (Rs50.99 crore) and Tata Steel (Rs40.18 crore).

Sensex loses a few points as pivotals diverge

The BSE Sensex ended slightly lower amid a mixed trend in various constituents of the barometer index. Trading was lacklustre mimicking the dull trade in Asian and European markets.

Heavyweights Reliance Industries and Infosys remained subdued for almost the entire day. Cement pivotals firmed up expecting strong Q3 results. Select side-counters surged as well.

The 30-share BSE Sensex lost 14.91 points (0.1%), to settle at 14,114.73. The benchmark index had recovered from a lower level after having dropped as many as 58.99 points, to 14,070.65, at 14:32 IST. Barring the dip in late-afternoon trade, the market remained ranged for the better part of trading. Earlier, the BSE benchmark struck an all-time high of 14,211.15 at the onset of trading.

While the Sensex ended in the red, the S&P CNX Nifty managed a marginal gain. It rose 2.1 points (0.05%), to settle at 4,080.50.

Although the market-breadth ended positive, it had weakened compared to that in the early-afternoon. For 1,334 shares rising on BSE, 1321 declined. As many as 50 shares were unchanged. The BSE Mid-Cap Index gained 26.59 points (0.44%), to settle at 6,081.10. The BSE Small-Cap Index rose 18.73 points (0.25%), to settle at 7505.44.

The BSE clocked a turnover of Rs 3976 crore, lower than Monday’s Rs 4703.78 crore.

Q3 results and the management guidance about the outlook will dictate the near-term trend on the bourses. After results, the focus is likely to shift to the Union Budget 2007-08. Market players are likely to start building fresh positions expecting a favourable policy for businesses in the budget.

The earnings season has started with Infosys, TCS, HCL Tech, HDFC Bank and UTI Bank unveiling strong numbers. While Wipro unveils Q3 results tomorrow, Ranbaxy's are scheduled for Thursday. Reliance Industries unveils results on Thursday and Satyam Computer's are slated for Friday.

A divergent trend was witnessed among sectoral indices on BSE today. The BSE Auto sector index rose 47.18 points (0.8%), to 5,699.73. The Banking sector index, the BSE Bankex, rose 16.74 points (0.23%), to settle at 7,419. The Capital Goods Index was the star performer with a gain of 94.83 points (1%), at 9,361.10.

BSE Metal index lost 108.67 points (1.1%), to 9,162.74. The BSE IT index shed 17.48 points (0.3%), to 5,378.89.

Bajaj Auto turned volatile post results. The stock rose 0.3% to Rs 2776 for the day. The scrip had declined as much as 1.8% to a low of Rs 2715 at 14:33 IST. Earlier, it had held firm ahead of the results. It had gained as much as 3.3% to a high of Rs 2859 at 13:52 IST.

Bajaj Auto’s net profit rose 24% in December 2006 quarter to Rs 345 crore from Rs 279 crore. Net sales rose 28.3% to Rs 2568.23 crore (Rs 2000.94 crore). The operating profit margin (OPM) was under pressure, declining sharply to 14.1% from 17.89% in December 2005 quarter. Bajaj Auto’s Q3 results hit the market in mid-afternoon trade.

Reliance Industries (RIL) lost 1.4% to Rs 1345.50 and Infosys shed nearly 1.4% to Rs 2211. As per reports, RIL has picked up large tracts of land in Delhi for Rs 980 crore for its retail venture.

Infosys and RIL have a combined weightage of 23.2 % in the Sensex.

Hindalco lost 1.3% to Rs 170, tracking weak global metal prices. Global copper was down 1.7% and zinc 3% on Tuesday.

State Bank of India l(SBI) lost nearly 1% to Rs 1211, after SBI chairman said SBI’s loan growth in April-December 2006 period was 16-17% compared with a nearly 30% rise for the banking sector.

Wipro firmed up ahead of its Q3 results, which will hit the market tomorrow morning. The stock gained 1.5% to Rs 637.

TCS dropped 0.5% to Rs 1321.15. In early-trade, the stock hit a lifetime high of Rs 1399. After trading hours on Monday, TCS reported a consolidated net profit as per US GAAP of Rs 1104.68 crore in December 2006 quarter, a growth of 11.4% sequentially. The net profit was at the top end of forecasts, between 4.4 - 13.9% growth, by eight analysts. Consolidated revenue as per US GAAP rose 8.4% on a sequential basis, surpassing an expected 6.2 - 8.2% growth of eight analysts.

TCS also announced an agreement with Banco Pichincha, Ecuador's largest private bank, to provide a comprehensive outsourcing solution, in a contract valued at over $ 140 million for five years.

Cement pivotals were in demand on expectations of strong Q3 results. ACC gained 1.4% to Rs 1099, Grasim gained 1.1% to Rs 2875 and Gujarat Ambuja Cements advanced 0.4% to Rs 144.25.

Cellular services major Bharti Airtel gained almost 1% to Rs 668, extending its recent rally on expectations of strong Q3 results.

L&T advanced 1.3% to Rs 1520. The stock hit a high of Rs 1525.

Housing finance major HDFC lost 2.5% to Rs 1555. It is the biggest loser among the 30-Sensex constituents.

Hindalco shed 1.3% to Rs 170, tracking weak global copper prices.

Mahindra & Mahindra surged 3% to Rs 983. The company said on Tuesday it will build a new plant worth Rs 2500 crore to make vehicles for its joint venture with Navistar International Corp. M&M on Tuesday signed an agreement with the Maharashtra government for the plant, which will have an initial capacity of 2,50,000 units. The production at the plant will begin in two years.

CMC spurted 23% to Rs 1119. The stock rose for the second day in a row after it reported strong Q3 results on Saturday (13 January 2007).

HCL Tech gained 1.3% to Rs 638, after it reported a stronger-than-expected 14.4% sequential growth in consolidated net profit as per US GAAP in Q2 December 2006 to Rs 286.20 crore. Revenue rose 6.2% to Rs 1465.10 crore. Revenue growth was within market expectation, between 3.3 - 7.9% growth.

IPCL lost 1.1% to Rs 286. After trading hours on Monday, IPCL reported 78% growth in net profit in December 2006 quarter at Rs 405 crore (Rs 228 crore). Net sales rose 42.6% to Rs 3056 crore (Rs 2143 crore).

Nestle India dropped 4.4% to Rs 1162. The company said late on Monday that the Rs 43.23 crore from its share premium account, will be distributed among shareholders. An amount of Rs 43.09 crore from the company's general reserve account will be paid to shareholders as a special dividend. The scheme is subject to regulatory approvals.

Cairn India rose nearly 1% to Rs 142.45, extending Monday’s surge. Oil and Natural Gas Corporation said on Monday it will announce plans to build a pipeline to transport crude oil from Cairn India oilfields in Rajasthan by the end of the week.

"We are discussing various options and whosoever will build the pipeline will recover the cost from the sale of crude," R.S. Sharma, Chairman, ONGC, said on the sidelines of an energy conference.

Separately, Cairn India said it is actively discussing with the Government of India and other parties, including ONGC and ONGC's subsidiary MRPL, arrangements for transporting crude from its Rajasthan oil fields and an agreement is still to be reached.

RCF jumped 10.6% to Rs 46.30, after the company said it will unveil Q3 results on 31 January 2007.

Batliboi rose 1.1% to Rs 113.50. Batliboi reported a surge in net profit in December 2006 quarter to Rs 3.95 crore (Rs 1.69 crore). Net sales rose 42.8% to Rs 36.23 crore (Rs 25.36 crore).

Lumax Auto Technologies settled at Rs 110.70 on NSE compared to the IPO price of Rs 75. The stock debuted at Rs 80 compared to the IPO price of Rs 75. The stock also hit a low of Rs 75 and a high of Rs 143. As many as 72.4 lakh shares changed hands in the counter on NSE.

Areva T&D India ended flat at Rs 997.90. The power transmission equipment maker said it had secured three orders of total worth Rs 252 crore.

Dalmia Cement Bharat rose 1.2% to Rs 423.50, after the company reported a net profit of Rs 64.84 crore in December 2006 quarter compared to a net profit of Rs 11.72 crore in December 2005 quarter. Net sales rose to Rs 231.05 crore from Rs 138.90 crore.

Prism Cement jumped 10% to Rs 41.60, after it reported a net profit of Rs 50.09 crore in December 2006 quarter compared to a net profit of Rs 3.35 crore in December 2005 quarter. Net sales rose to Rs 190.01 crore from Rs 127.24 crore.

Patel Engineering ended flat at Rs 462. The company today reported 16.4% growth in net profit in December 2006 quarter to Rs 29.46 crore (Rs 25.32 crore). Net sales during the same period rose to Rs 284.12 crore (Rs 231.32 crore).

Bajaj Auto Finance rose 2.4% to Rs 385. The company on Monday reported a net profit of Rs 16.86 crore in December 2006 quarter compared to a net loss of Rs 11.81 crore in December 2005 quarter. Total income surged to Rs 126.76 crore from Rs 71.37 crore.

KS Oils jumped 5% to Rs 333.10, after it reported a net profit of Rs 20.21 crore in December 2006 quarter compared to a net profit of Rs 3.55 crore in December 2005 quarter. Net sales rose to Rs 305.15 crore (Rs 123 crore).

Lok Housing & Constructions jumped 5% to Rs 282.55, after it reported a net profit of Rs 24.19 crore in December 2006 quarter compared to a marginal net loss in the corresponding period last year. Net sales rose to Rs 81.78 crore (Rs 17.71 crore).

Aztec Software & Technology Services plunged 9% to Rs 147.15, on news that the exit of a major client and the appreciation of the rupee will cap growth in the Jan-March quarter. The software services firm earlier posted a 7% rise in Oct-Dec net profit.

Sumeet Industries jumped 5% to Rs 18.95. Sumeet Industries said on Tuesday, its board had approved allotment of 2.5 million shares on a preferential basis to promoters and associates at Rs 30 a piece.

International ratings agency Moody's Investors Service said on Tuesday, there is no change to India's sovereign ratings outlook, and said large public debt was keeping its domestic currency rating at a speculative grade.

"A healthy external position is reflected in an investment-grade Baa3 foreign currency rating, but heavy public debt hampers its domestic currency rating," Moody's statement read. India's domestic currency debt is assigned a speculative-grade Ba2 rating, with a stable outlook. Debt as a ratio of gross domestic product now stands at 92%, the agency said.

European markets were subdued. Key benchmark indices in Germany and France were down by 0.1% each. London's FTSE 100 index was flat. Asian markets were mixed. Key benchmark indices in Hong Kong, Japan, and South Korea were down between 0.04 - 0.2%. Key benchmark indices in Singapore and Taiwan were up between 0.09 - 0.1%. US markets were closed on Monday.

Oil prices edged lower below $53 a barrel on Tuesday, pressured by warm weather and ample supplies. US crude was down 14 cents at $52.85 a barrel. Prices last week fell to a 19-month low of $51.56 for US crude, taking losses since the end of last year to around 15%.

Anagram - Shipping Sector Earnings Preview

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Sharekhan Daring Derivatives for January 16, 2007

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Global Broadcast News: Sharekhan IPO Flash dated January 16, 2007

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Sharekhan Highnoon dated January 16, 2007

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ILFS - Sterlite Industries Q3FY07 Result Update

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Market may remain positive

Although the index gained nearly half percent in yesterday's trades, the market is likely to exhibit side-ways movement on the back of a strong intra-day volatility. The Asian indices, notably the Nikkie 225 index (up 0.25%) and the Jakarta Composite (up 0.98%) during intra-day trades, may help the domestic indices open on a strong note. The US market was closed yesterday on account of Martin Luther King Jr.'s Birthday.

Among the domestic indices, the Nifty could test its recent high on 4100 on the upside while it has likely supports at 4040 on the downside. The Sensex has a likely support at 14100 and could face resistance at 14200.

Results to be announced today are Asahi Fibres Ltd, Baroda Extrusion Ltd, Batliboi Ltd, Can Fin Homes Ltd, ETC Networks Ltd, Explicit Finance Ltd, Ficom Organics Ltd, G L Hotels Ltd, H T Media Ltd, Jubilant Organosys Ltd, Jyoti Ltd, K S Oils Ltd, Kamanwala Housing Construction Ltd, Lok Housing & Constructions Ltd, Multiplus Holdings Ltd, Patel Engineering Ltd, Paushak Ltd, Prime Securities Ltd, Prism Cement Ltd, S S Organics Ltd, Shardul Securities Ltd, Siro Plast Ltd, State Bank Of Travancore, Swastika Fin-Lease Ltd, Tripex Overseas Ltd, Vinyl Chemicals (I) Ltd, Walchand Peoplefirst Ltd, Wipro Ltd

Market may remain firm

The market may remain firm with profit-taking expected to cap the upside after the latest steep surge. From 13,362.16 on 10 January 2007, the Sensex has gained 767.48 points (5.7%) to 14,129.64 by 15 January 2007. The downside will be limited due to strong Q3 results. After trading hours on Monday, TCS reported Q3 results at the top end of analysts’ expectations. The key result today is that of Bajaj Auto.

FIIs have resumed buying on the bourses after their recent heavy sales. FIIs purchased shares worth a net Rs 207 crore on 12 January. They had pumped in Rs 159.20 crore on 11 January. As per provisional data, FIIs were net buyers to the tune of Rs 304 crore on Monday (15 January), the day when Sensex had risen 73 points. They were net buyers to the tune of Rs 527 crore in index-based futures and net sellers to the tune Rs 153 crore in individual stock futures that day.

The earnings season has had a sound start with Infosys, TCS, HCL Tech, HDFC Bank and UTI Bank unveiling strong numbers.

Asian stock markets traded near landmark peaks on Tuesday, but moves were mixed in a narrow range. Key benchmark indices in Japan, Singapore, South Korea and Taiwan were up between 0.25 - 0.34%. Key benchmark indices in Hong Kong and South Korea were down between 0.04 - 0.22%. US markets were closed on Monday.

Nymex crude was down 54 cents at $52.45 a barrel on Tuesday.


Even the weak start to peak!

Weak eyes are fondest of glittering objects.

Suddenly many market players appear to have got the Midas Touch. Just about everything they touch are hitting new highs and giving returns much better than gold would have in recent times. But remember the over-used adage - all that glitters is not gold. And few strokes of rubbing will reveal the worth of what you hold. Not that we are suddenly negative today. Just reminding you to stay cautious against the careless attitude of getting into intrinsically weak counters hoping to ride the bull run.

We are expecting another action packed day with lots of news, especially results. The mood seems to have improved after the highly volatile few days earlier in the month. Though the market may remain choppy but the bias is definitely positive at the moment, spurred by the strong performance of India Inc so far. FIIs too seem to be back in action after a brief hiatus. Global markets are also smiling as crude has taken a big dip. IT stocks will continue to drive the momentum for a while, though one need not ignore the old economy pack, as the Indian economy appears to have hit a purple patch.

Having talked about the bullish scenario, we must advise investors to remain alert at all times for any unforeseen event(s). One such development could the hike in interest rates in Japan followed by an increase in the domestic rates as well later this month. Valuations have shot through the roof, particularly for the large caps. Some action can be expected in small- and mid-caps, but one has to pick these scrips carefully. Weak banks may gain strength on the bourses following comments by a minister that the amendment to to the Banking Regulation Act will facilitate foreign banks to take over under-capitalized private banks.

Cairn India may come under fresh pressure amid reports that market regulator SEBI is probing the company's controversial IPO. Also, the company has denied reports that it has already reached an agreement with ONGC on building the pipeline to evacuate crude from it's Rajasthan fields.

TCS, HCL Tech and other IT shares will gain further after the two IT majors announced stellar set of results for the October to December quarter. M&M is likely to rise amid reports that the Romanian authorities are in talks with the company for selling Tractorul assets. FMCG stocks such as HLL and Dabur might advance as the companies have recently effected price increases in select products.

BHEL could be in action as the company has signed a deal with Alstom for the transfer of technology for super critical power plants. Keep an eye on Nestle India, as the company has decided to give special dividend to shareholders. Atlanta might gain as its Board is to announce a stock split today.

Anant Raj Industries is another scrip to watch out for as the real estate firm has come out with strong numbers for the October-December quarter. S. Kumars Nationwide, Tulip IT, RPG Transmission and LT Overseas have also reported good results. Sanwaria Agro might attract some attention as the group is planning to enter into the real estate sector.

Shares of Lumax Auto Technologies Ltd. will get listed on the bourses today. The IPO of House of Pearl Fashions will kick off today. The public issue of Akruti Nirman has been subscribed 1.3 times while that of Autoline Industries has been subscribed nearly 20 times.

US financial markets were shut on account of the Martin Luther King Jr. day.

European shares hit six-year highs on Monday. The pan-European Dow Jones Stoxx 600 index rose 0.6% to 374.16. The UK-based FTSE 100 rose 0.4% to 6,263.50, the German DAX Xetra 30 gained 0.4% to 6,731.74 and the French CAC-40 increased 0.2% to 5,631.08.

Asian markets rose on Tuesday after Goldman Sachs recommended investors to buy Japanese electronic component makers amid higher earnings expectations.

The Morgan Stanley Capital International Asia-Pacific Index added 0.2% to 140.46 at 11:30 a.m. in Tokyo. Key indexes in Australia and Singapore rose to records. Stocks advanced around the region, except in Hong Kong and New Zealand.

The Nikkei gained 43 points at 17,253 while the Hang Seng in Hong Kong was down 71 points at 19,998. The Kospi in Seoul was flat at 1389 and the Straits Times in Singapore advanced 9 points to 3045.

The Bank of Japan may raise its benchmark lending rate from 0.25% to curtail excessive investment and ward off the threat from any possible asset bubbles. Governor Toshihiko Fukui and his colleagues will probably boost the key overnight lending rate to 0.5% at a meeting that ends on January 18.

In the emerging markets, the Bovespa in Brazil fell 0.4% to 42,919 while the IPC index in Mexico rose 0.6% to 26,480 and the RTS index in Russia jumped 2.9% to 1850.

Results Today: Bajaj Auto, Batliboi, Gujarat Ambuja Exports, HT Media, Prism Cement, Patel Engineering, Lok Housing, KS Oils, Jubilant Organosys and Escorts.

Major Bulk Deals:
Macquarie Bank has sold Crew BOS; Prudential ICICI AMC has bought Finolex Cables while Fidelity has sold the scrip; Reliance Capital has picked up Rallis India while UTI MF has sold the stock; Principal MF has purchased Sagar Cement; Bear Stearns has picked up Sujana Metal.

Market Volumes:
The turnover on NSE was down by 14.8% to Rs85.18bn. BSE Metal index was the major gainer and gained 2.67%. BSE Capital Good index (up 1.51%), BSE Consumer Durable index (up 1.19%), BSE Pharma index (up 0.96%) and BSE Oil & Gas index (up 0.78%) were among the other major gainers.

Volume Toppers:
IFCI, SAIL, TTML, IDBI, Nagarjuna Fertilizers, Cairn India, R Com, Indiabulls, ITC, Ispat Industries, Reliance Industries, TCS, Gujarat Ambuja, Lloyds Steel, HLL, Uttam Steel and MTNL.

Upper Circuit Filters:
Flex Industries, GMR Industries, Zandu Pharma, Tata Sponge, Jyoti Structure, Shyam Telecom, Heritage Foods, RIIL, Nesco Ltd, Anant Raj Industries, KEC International, Rajesh Exports, Ganesh Housing, KS Oils, KLG Systel, BF Utilities, Prajay Engineering and Atlanta.

Delivery Delight:
ABB, Aurobindo Pharma, Bayer (India) Ltd, BEML, CESC, Cummins India, Financial Technologies, Gammon India, Godrej Industries, GNFC, Havells India, HDFC Bank, India Cements, India Infoline, IPCL, Infotech Enterprises, Jet Airways, Mahindra & Mahindra, Mahindra Gesco, NDTV, Ranbaxy, Sesa Goa, Siemens, Strides Arcolab, TCS, Tisco and UTI Bank.

Brokers Recommendations:
UTI Bank – Under performer from Enam with target of Rs430

Long Term Investment:
Financial Technologies

Major News Headlines:
Sterlite Industries Q3 profit at Rs2.14bn (up 43%), sales at Rs32.2bn (up 48%)
ABB wins Rs1.8bn contract from Indian Electricity Co.
TCS Q3 profit at Rs11.05bn (up 47%), sales at Rs48.6bn (up 41%) and interim dividend of Rs3 per share
Tulip IT Q3 profit at Rs274.91mn (up 101%), turnover at Rs2.22bn (up 64.4%)
RPG Transmission Q3 profit at Rs58.7mn (up 136%), total income at Rs907.9mn (up 56.5%)
SREI Infra signs deal with European Bank of Reconstruction and Development
SingTel will consider hiking Bharti shares under 'right terms'
Geometric Q3 profit at Rs82.99mmn (up 253%), sales at Rs453.8mn (up 42.9%)
Tata Steel to purchase Rawmet Ferrous
ACE to buy 74% in Romanian company

SKP Research - GBN

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Sharekhan Investor's Eye dated January 15, 2007


  • November 2006 IIP zooms to 14.4%


Cluster: Apple Green
Recommendation: Buy
Price target: Rs634
Current market price: Rs580

Intangible gains

Key points

  • The board of directors of Marico has approved a proposal to split the stock in the ratio of 1:10.
  • The board has also proposed financial restructuring to write off the intangibles against the reserves.
  • The restructuring will lead to a leaner balance sheet and better return ratios.
  • Due to the restructuring our earnings estimate would be higher by 17.1% for FY2008. We are not changing our earnings estimates and price target but will be revisiting the same after the Q3FY2007 results.
  • The stock is trading at a price/earnings ratio of 24.1x FY2008E and enterprise value/earnings before interest, depreciation, tax and amortisation of 13.7x FY2008E. We continue to remain bullish on Marico and reiterate a Buy on the stock with a price target of Rs634.

Elder Pharmaceuticals
Cluster: Apple Green
Recommendation: Buy
Price target: Rs508
Current market price: Rs397

Price target revised to Rs508

Key points

  • The revenues of Elder Pharmaceuticals (Elder) grew by 28.6% in H1FY2007 and by over 30% in Q2FY2007. We expect this 30% + growth trend to continue into H2FY2007 on the back of the sustained momentum in the company’s core brands, pick-up in the revenues from the in-licenced products and the growing contribution from the Fairone brand.
  • Elder has been spending aggressively on advertising and promoting its existing products. With the increased penetration of its existing brands, rapid pace of new product launches and new in-licencing deals, we believe the growth momentum will continue in FY2008 as well.
  • A lower raw material cost on account of backward integration into active pharmaceutical ingredients (APIs), an improving product mix, and substantial excise and tax savings arising out of the shift of manufacturing to the plants in the fiscal havens of Uttaranchal and Himachal are expected to improve the margins of the company. The increased selling and marketing expenses, on the other hand, are likely to put pressure on the margins. We expect Elder’s margins to expand by 180 basis points to 19% in FY2008E.
  • To account for the above, we have revised our revenue and earnings estimates for Elder. We have revised Elder’s revenue estimates upward by 9.2% and 12.9% to Rs457.5 crore and Rs562.1 crore for FY2007 and FY2008 respectively. We have also upgraded Elder’s net profit estimate by 10.4% to Rs55.7 crore and Rs74.8 crore for FY2007 and FY2008 respectively.
  • In view of its strong growth potential, we remain positive on Elder’s future growth prospects. At the current market price of Rs397, Elder is quoting at 9.9x our revised FY2008 earnings estimate. Based on our revised earnings, we are upgrading our price target for the stock to Rs508.

Aban Offshore
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs2,090
Current market price: Rs1,670

Results in line with expectations

Result highlights

  • Aban Offshore Ltd (AOL) reported a 4.5% growth in its stand-alone revenues to Rs126.1 crore for the third quarter ended December 2006.
  • The operating profit margin (OPM) declined by 310 basis points to 54.8% largely due to higher insurance charges (up 260 basis points) and an increase in the other expenses (up 660 basis points due to the amortisation of the expenses related to the foreign currency convertible bond issue done earlier). On the other hand, the savings in the staff cost and repairs as a percentage of sales limited the decline in the OPM.
  • The net profit grew at a relatively higher rate of 13% to Rs20.8 crore in line with expectations. The growth in the bottom line was aided by an 87% jump in the other income to Rs5.6 crore. However, it should be noted that the company does not declare consolidated quarterly results and the stand-alone results do not reflect the robust growth in the earnings on a consolidated basis. We expect the performance to improve significantly in FY2008 and FY2009 due to the huge incremental gains from the additional assets and the scheduled re-pricing of its assets at relatively much higher day rates going forward.
  • Along with the results, the company has announced the signing of a joint venture with the state government of Gujarat to offer offshore drilling services. The memorandum of understanding (MoU) has been signed between Gujarat State Petroleum Corporation (nominee of the Gujarat state government) and AOL’s subsidiary, Aban 8 Pte Ltd. The joint venture would function through a special purpose vehicle. The company is expected to spell out the specific details about the scope and scale of the operations of the new venture over the next couple of months.
  • At the current market price the stock trades at 14x FY2008 and 6.8x FY2009 consolidated earning estimates. We maintain our Buy call on the stock with a price target of Rs2,090 (based on the derived value of its subsidiaries combined with the calculated value of its stand-alone earning estimates).

UTI Bank

Cluster: Emerging Star
Recommendation: Buy
Price target: Rs580
Current market price: Rs535

Performance above expectations

Result highlights

  • UTI Bank's Q3FY2007 profit after tax (PAT) reported a 40% year on year (yoy) growth to Rs184.6 crore which is 6.4% higher than our estimate of Rs173.5 crore, mainly due to a higher trading income reported during the quarter.
  • The net interest income (NII) was up by 44.7% to Rs415.8 crore compared with our estimate of Rs407 crore. The reported net interest margin (NIM) expanded by six basis points yoy and by eight basis points quarter on quarter (qoq).
  • The other income zoomed by 61.3% to Rs279.7 crore due mainly to a higher trading income while the core fee income growth remained robust at 58.9% yoy.
  • The operating expenses continue to remain high due to a significant increase in the employee expenses and network expansion.
  • The bank currently has a network of 481 branches with 2,126 automated teller machines (ATMs). This has helped the bank to grow its savings and current account deposits by 58.8% and 61.3% respectively compared with the overall deposit growth rate of 49.7% and improve its current and savings account (CASA) ratio to 37.1% from 34.7% yoy. However on a sequential basis, the CASA ratio has declined to 37.1% from 40% in Q2FY2007 mainly due to a 14.2% quarter on quarter (q-o-q) decline in the current account balance.
  • The capital adequacy ratio (CAR) for the bank as on December 2006 stood at 11.8% with the tier-I capital at 6.96%. The bank has already raised Rs420 crore of hybrid tier-I capital and exhausted the headroom to raise more funds using the same route. Hence, considering the growth potential of the bank, we feel the bank needs to come out with a plain equity issue in FY2008. We have factored in an equity dilution of 3.6 crore shares (12.8% of pre-issue equity capital) at an issue price of Rs500 per share. This would help the bank to raise Rs1,800 crore and improve the tier-I ratio to above 8%. The book value (BV) per share would increase by almost Rs40 per share post-dilution from our previous pre-issue estimates.
  • Based on the improved performance of the bank we have also increased our FY2007 and FY2008 PAT estimates by 7.3% to Rs645 crore and Rs829 crore respectively. Thus the revised FY2007 earnings per share (EPS) estimate stands at Rs23.2, up from Rs21.6. The equity dilution assumed by us has reduced the FY2008 EPS estimate rom Rs27.8 to Rs26.4. At the current market price of Rs535 the stock is quoting at 20.3x its FY2008E EPS, 10.3x its FY2008E pre-provisional profit (PPP) and 2.9x its FY2008E BV. We feel the dilution would be BV accretive and hence maintain our Buy recommendation on the stock with a revised price target of Rs580.

Nicholas Piramal India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs393
Current market price: Rs262

Earnings upgraded

Key points

  • Nicholas Piramal India Ltd (NPIL) and Eli Lilly and Co have signed a landmark new drug development agreement to develop and, in certain regions, commercialise a select group of Lilly's pre-clinical drug candidates that span multiple therapeutic areas. This agreement indicates the world-class research and development (R&D) capabilities of Nicholas Piramal.
  • While NPIL's landmark deal with one of the leading innovative drug researchers like Eli Lilly has infused confidence among the investors the domestic formulations business has reported a more than expected growth. Alongside, the increased momentum in its CRAMS business and the successful integration and improvement in the capacity utilisation of the recently acquired facilities at Morpeth, UK (from Pfizer) enhances the earning visibility of the company. Hence, we are revising our estimates upward for FY2007 and FY2008.
  • With the better than expected growth in the domestic formulation business, particularly in respiratory, anti-diabetics, gastrointestinal, dermatology, NSAIDs etc and the strong bounce back in the cough and cold brand--Phensedyl--we are revising the compounded annual growth rate (CAGR) of the formulation business from 12% to 14% during FY2006-08. On the other hand, the exports, largely supported by the successful integration and improvement in the capacity utilisation at Morpeth and the steady growth in the CRAMS business, would grow at a CAGR of 88% during FY2006-08. Hence, we are revising our revenue estimates to Rs2,347.8 crore and Rs2,770.1 crore for FY2007 and FY2008, respectively.
  • On the margin front, we estimate a 480-basis-point expansion to 17.3% during FY2006-08, which would largely be driven by the increasing high-margin revenue flow from CRAMS, progressive shifting of manufacturing to excise-exempt facility at Baddi (Uttaranchal) and improved operating leverage at the Morpeth facility.
  • With the improving revenues and margin coupled with the lower tax burden due to the commissioning of the manufacturing facility at Baddi,  we estimate the net earnings at Rs232.8 crore (87% growth) and Rs345 crore (48% growth) for FY2007 and FY2008, respectively. Our revised earnings estimates stand at Rs11.0 per share for FY2007 and Rs16.4 per share for FY2008. At the current market price of Rs262, NPIL is discounting its FY2008 estimated earnings by 16.0x.
  • As per our revised estimates, we have valued NIPL's continuing business at Rs360 and have valued the drug development deal at Rs33 (ie 10x of the risk-adjusted EPS of Rs3.3). While valuing the drug development deal, we have just valued the potential milestone earning and ignored the potential royalties from the sale of the product by Eli Lilly in the USA, the EU & Japan and the revenue potential from the sale of the product by NPIL in other selected markets. Hence, we are fixing a revised target price of Rs393.

HCL Technologies
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs720
Current market price: Rs630

Firing on all cylinders

Result highlights

  • HCL Technologies has reported a revenue growth of 6.2% quarter on quarter (qoq) and 39% year on year (yoy) to Rs1,465.1 crore for the second quarter ended December 2006, which is slightly below expectations. The sequential growth was largely driven by a 12.5% increase in the revenues of the infrastructure management service (IMS) business. On the other hand, the business process outsourcing (BPO) and software services businesses grew at a relatively lower rate of 5.4% and 5.2% respectively, on a sequential basis.
  • The earnings before interest, tax, depreciation and amortisation (EBITDA) margins improved by 40 basis points to 22.1% on a sequential basis, despite the annual salary hikes given to 15% (senior and middle management level) of its work force with effect from October, the adverse impact of the steep appreciation in the rupee (3.6% appreciation in the average realised exchange rate against the US dollar) and the relatively higher selling, general and administration (SG&A) cost as a percentage of sales. The margin expansion was primarily driven by the higher employee utilisation (positive impact of 120 basis points) and better realisations (positive impact of 140 basis points).
  • In terms of segments, the EBITDA margins of the software service and BPO businesses improved by 60 basis points and 40 basis points respectively. On the other hand, the IMS business reported a marginal decline in the margins to 17.5%, down 10 basis points sequentially.
  • The earnings grew a a robust rate of 14.4% qoq and 57.8% yoy to Rs286.2 crore (ahead of our expectations of Rs258.8 crore and the consensus estimates of a flat growth sequentially). The growth in the earnings was also aided by the huge foreign exchange [forex] gains of Rs34.7 crore on the open forward contracts.
  • In terms of operational highlights, the management indicated that the ramp-up in the large deals is beginning to make a material impact on the overall performance. The revenues from the six multi-million multi-year deals contributed to around 10% of the total turnover and is reflected in the third consecutive quarter of over 8% quarter-on-quarter (q-o-q) growth in the software services business in the dollar terms. What's more, the EBITDA margin on the revenues from the large deals is indicated to be higher than the average margins of the company.
  • At the current market price the stock trades at 18.8x FY2007 and 15.2x FY2008 estimated earnings. We maintain our Buy recommendation on the stock with a price target of Rs720.

Tata Consultancy Services
Cluster: Evergreen
Recommendation: Buy
Price target: Under review
Current market price: Rs1,328

Q3FY2007—fist cut analysis

Result highlights

  • Tata Consultancy Services (TCS) has reported a growth of 8.4% quarter on quarter (qoq) and of 40.8% year on year (yoy) in its consolidated revenues to Rs4,860.5 crore. The sequential revenue growth was largely driven by a 7.87% growth in volumes, a 2% improvement in the billing rates and productivity gains of 2.6% on the fixed price projects. On the other hand, the revenue growth was dented by 2.46% due to the appreciation of the rupee and by 1.56% from the shift towards offshore business.
  • The earnings before interest and tax (EBIT) margins improved by 79 basis points to 26.1% on a sequential basis. The steep appreciation of the rupee dented the margins by 1.37% that was more than made up by the positive impact of 1.74% from the higher billing rates, 0.28% from the shift towards offshore business and 0.14% from the cost efficiencies. The company maintained its broad guidance of maintaining the full year margins close to 25.8% reported in FY2006.
  • The other income stood at Rs30 crore (includes foreign exchange fluctuation gain of around Rs5 crore), up from Rs7.7 crore in Q2FY2007. Consequently, the earnings grew at a relatively higher rate of 11.4% qoq and 47.2% yoy to Rs1,104.7 crore.
  • In terms of operational highlights, the company added 5,562 employees and 5 new clients during the quarter. It also bagged five large deals; two deals of over $100 million and three deals of over $50 million.
  • Given the higher-than-expected performance, we would be revising upward the earnings estimates and the price target in the detailed result update. We maintain the Buy call on the stock.
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