Central Bank of India: Sharekhan IPO Flash dated July 23, 2007
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Tuesday, July 24, 2007
Sensex, Nifty strike all time closing highs
The market ended on a winning steak for the firth straight session, helped by steady buying interest for capital goods, power and IT stocks. But auto, cement, FMCG and pharma shares saw selling pressure. The market was choppy today, which is likely to be the case over the next two days ahead of the expiry of the July 2007 derivatives contracts on 26 July 2007.
The BSE 30-share Sensex rose 62.72 points to 15,794.92, an all time closing high. It opened lower at 15,802.19, but immediately started advancing to hit an all-time high of 15,868.85 at 10:45 IST as buying intensified. It slipped to a low of 15,742.69 at 12:34 IST.
It oscillated in a range of 127 points during the day.
Sensex has posted gain of 505.10 points in five trading sessions from a recent low of 15,289.82 on 17 July 2007.
The S&P CNX Nifty gained 1.40 points to 4,620.75, also an all time high. It hit an all time high of 4647.95 in intra-day trade. The Nifty July 2007 futures settled at 4,609.85, a discount of 10.80 points as compared to spot closing
The market breadth, indicating the overall health of the market, was negative on BSE as small-cap and mid-cap shares came under selling pressure. 1,776 shares declined on BSE as compared to 901 that advanced, while 64 remained unchanged.
The BSE Mid-Cap Index settled at 6,812.34, down 37 points or 0.5% while the BSE Small-Cap Index slipped 81 points or 1% to 8,153.63
The total turnover on BSE amounted to Rs 5,558 crore as against Rs 4,854.72 crore on Monday, 23 July 2007. The turnover in NSE's F&O soared to highest ever Rs 64,281 crore as compared to Rs 51,007.17 on Monday, 23 July 2007.
The total open interest in NSE's futures and option (F&O) segment vaulted to an all-time record of Rs 99,812.37 crore on 24 July 2007, from Rs 92,507.76 crore on the previous day.
Among the Sensex pack, 19 declined while the rest advanced
Auto stocks came under selling pressure on profit booking, with the BSE Auto Index losing 1.40% to 5,125.51. Top utility maker and tractor major Mahindra & Mahindra was the top loser from the Sensex pack. The stock was down 3.13% to Rs 797.30 on 75,509 shares.
Tata Motors (down 2.87% to Rs 749), Maruti Udyog (down 1.52% to Rs 821) were the other losers from the auto sector.
India's top bike maker Hero Honda slipped 1.67% to Rs 693 after the two-wheeler maker reported a 20.1% fall in net profit to Rs 189.84 crore in Q1 June 2007 over Q1 June 2006.
FMCG stocks also eased led by MNC heavyweight Hindustan Unilever (HUL) which shed 1.96% to Rs 200. The BSE FMCG Index lost 1.5% at 1,843.30. Colgate (down 1.27% to Rs 369) and United Spirits (down 9.06% to Rs 1333) slipped
Cement stocks also took a breather after recent rally. ACC (down 2.94% to Rs 797.30), Ambuja Cements (down 0.63% to Rs 134.35) and Grasim (down 0.20% to Rs 3025), declined from the cement pack.
Leading power utility Reliance Energy (REL) galloped 7.58% to Rs 768.95 on reports that it is in talks with commodity exchanges, the Multi Commodity Exchange (MCX) and the National Commodity Derivatives Exchange (NCDEX), to pick up equity stake in two power exchanges proposed to be set up by them. It was the top gainer from the Sensex pack. The stock rose on high volume of 20.56 lakh shares on BSE.
Fourth largest software exporter Satyam Computer Services surged 4.95% to Rs 516 on announcing strategic initiatives to strengthen its presence in South Africa. The company is banking on a sizeable number of contracts emanating from South Africa in the coming years and sees potential in providing IT solutions to the banking and financial, energy and utilities and government sectors.
Shares from the capital goods sector advanced as investors chased these stocks betting on their soaring order book positions of these companies. The capital goods stocks were further boosted by reports that these companies would bag lucrative contracts as a result of the breakthrough achieved in the India-US nuclear deal.
State-run engineering major Bharat Heavy Electricals (Bhel) continued galloping, and gained 4.56% to Rs 1,846 today, coming of its all-time high of Rs 1,899 struck earlier in the day. The company secured a Rs 1,829-crore order for manufacturing and setting up a three 500-MW thermal power units in Haryana on Monday, 23 July 2007, when it had gained 7.5%. The project is a joint venture between National Thermal Power Corporation, Harayana State Electricity Board and Indraprastha Power Generation Company.
Engineering & construction major L&T gained 2.10% to Rs 2,669, after striking an all-time high of Rs 2,735.
Crompton Greaves (up 0.67% to Rs 273.25), Thermax (up 0.65% to Rs 602.30), and Bharat Bijlee (up 1.78% to Rs 2,420.30) were the other winners from capital goods sector. The BSE Capital Goods Index was up 1.26% at 13,767.31, and was the top gainer from sectoral indices on BSE. It also hit an all time high of 14,049.40
NTPC jumped 3.58% to Rs 163 after the state-run power generation firm signed an MoU with Asian Development Bank for setting up a joint venture company to undertake renewable power generation. NTPC and other government entities will hold up to 50% in the joint venture to be established with other strategic investors, who will hold the remainder. ADB is expected to acquire 20% at a later stage. Financial details were not disclosed.
India's top oil exploration firm Oil and Natural Gas Corporation gained 0.71% to Rs 916 after chairman R.S. Sharma today said ONGC will produce 12 million standard cubic metres per day (mscmd) of gas from a block in the Krishna Godavari basin off India's east coast from 2012.
India's only New York-listed pharma firm Dr Reddy's Labs gained 0.73% to Rs 672 after it reported a 30.5% growth in net profit in Q1 June 2007 to Rs 182.50 crore over Q1 June 2006.
However, Ranbaxy (down 1.55% to Rs 345.20), Cipla (down 1.75% to Rs 188), and Biocon (down 2.65% to Rs 455), edged lower. The BSE Health Care Index slipped 0.5% at 3,778.21.
Index heavyweight Reliance Industries (RIL) slipped 0.13% to Rs 1,908.50. The stock hit an all-time high of Rs 1,932 in intra-day trade today. As per reports, RIL plans to build a fertiliser plant that will use natural gas to be produced from its fields off India's east coast. The company has submitted a proposal to the fertiliser ministry to set up a plant with a capacity of up to four million tones.
Real-state developer Housing Development and Infrastructure settled at Rs 558.60 on BSE, a modest premium of 11.72% over the price of Rs 500 per share. The stock debuted at Rs 567.50 and hit a low of Rs 473.50 and high of Rs 617.50. On BSE, 1.56 crore shares were traded on the counter. The stock also debuted in NSE's F&O segment with a lot size of 400. The HDIL IPO was subscribed 6.6 times.
ABG Shipyard soared 7.72% to Rs 492 after it secured a major order for construction of 12 vessels of approximately 32,000 dead weigh tonnage (DWT) for $360 million (Rs 1,460 crore) from Precious Shipping Public Co. Thailand, as a part of its ship acquisition programme. Following this order the order book position of ABG Shipyard stands at about Rs 5,560 crore.
Punj Lloyd slipped 0.36% to Rs 277.90 despite its joint venture Dayim Punj Lloyd securing a Rs 320-crore order from Saudi Kayan Petrochemical Company to build tanks and terminals.
Patni Computer Systems lost 2.55% to Rs 515. It acquired a US-based life-sciences services consultancy Taratec Development Corporation for $27.2 million, on 23 July 2007. With an annual revenue of $20 million, Taratec provides business, information technology and regulatory compliance products and services for the life-sciences industry, a high-growth market.
Jindal Stainless vaulted 5.23% to Rs 163 after its net profit rose 62.6% to Rs 82.60 crore in Q1 June 2007 over Q1 June 2006. Sales moved up 40% to Rs 1196.82 crore in Q1 June 2007 over Q1 June 2006.
Ahluwalia Contracts India rose 0.20% to Rs 530.30 after it scheduled a meeting of the board of directors of the company to be held on 31 July 2007 to consider and approve sub-division of shares.
Indiabulls Financial Services plunged 3.64% to Rs 640 despite reporting a surge in consolidated net profit in Q1 June 2007 to Rs 166 crore compared to Rs 77 crore in Q1 June 2006. Total revenue surged to Rs 443 crore, from Rs 221 crore. The results hit the market before trading hours today, 24 July 2007.
Modern Dairies jumped 5% upper limit of Rs 49.05 after its board approved a liberal 1:1 bonus issue after market hours yesterday, 23 July 2007.
Sun Pharma Advanced Research Company slumped 16.90% to Rs 90.45 after reporting a net loss of Rs 9.95 crore in Q1 June 2007. There were no sales reported in Q1 June 2007. The drug maker had declared the results after market hours yesterday, 23 July 2007.
Siemens rose 1.2% to Rs 1338 after the power equipment maker posted a 45% in net profit in Q3 June 2007 to Rs 81.79 crore over Q3 June 2006 and said it had valued its automotive unit at Rs 170 crore for the purpose of sale of the unit to another group company. Siemens is the Indian unit of Europe's largest engineering company Siemens AG.
Apollo Hospital Enterprises gained 2.41% to Rs 501.55 after India's largest corporate hospital in terms of sales posted a 73% surge in net profit to Rs 30 crore in Q1 June 2007 over Q1 June 2006.
World's second-biggest forgings company Bharat Forge lost 1.33% to Rs 301.10, off the day's high of Rs 316.95, after it reported a 26% growth in net profit to Rs 64.81 crore in Q1 June 2007 over Q1 June 2006.
Easun Reyrolle (ERL), a leading player in the field of power system protection, was locked at the 5% upper limit of Rs 1,248.25 after the company on Friday, 19 July 2007 set 7 August 2007 as record date for 5-for-1 stock split. The stock had jumped 5% to Rs 1,188.85 on Monday, 23 July 2007, boosted by the announcement.
Lube oil marker Castrol India jumped 10.91% to Rs 280 after it posted 31% growth in net profit to Rs 65.93 crore in Q2 June 2007 over Q2 June 2006
Private sector bank Kotak Mahindra Bank dropped 0.25% to Rs 741 after it said its board had approved issue of up to 1.7 crore equity shares in the domestic and/or international markets at a price and other terms and conditions to be decided by the board in accordance with the relevant regulations and guidelines issued by the Securities and Exchange Board of India.
Asian indices gained today, 24 July 2007. Japan's Nikkei (up 0.21% to 18,002.03), Taiwan's Taiwan Weighted (up 1.27% to 9,744.06), Hong Kong's Hang Seng (up 0.46% to 23,472.88) and Singapore's Straits Times (up 0.82% to 3,665.13) gained.
Shanghai Composite was down 0.07% to 4,210.32. It is near its all-time high of 4,335.96
European indices were trading on a weak note today, 24 July 2007.
US stocks rebounded yesterday, 23 July 2007, after a fresh round of buyout news offered evidence that Wall Street's penchant for dealmaking hasn't disappeared. Better-than-expected profit news from Merck & Co. also boosted the mood on Wall Street. The Dow Jones industrial average rose 92.34 points, or 0.67%, to 13,943.42
Broader stock indicators also advanced. The Standard & Poor's 500 index rose 7.46 points, or 0.49%, to 1,541.56. The technology-heavy Nasdaq composite index showed more modest gains, rising 2.98 points, or 0.11%, to 2,690.58.
Oil prices extended losses in Asia today, 24 July 2007 of nearly a dollar the previous session amid worries that crude prices have risen too high in recent weeks and on speculation that recent OPEC comments may signal a less bullish position on production and supplies. Light, sweet crude for September delivery lost 13 cents to $74.76 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract fell 90 cents to $74.89 a barrel on Monday, 23 July 2007.
Sensex gains amid sharp volatility
The Sensex seems to be determined to make new highs in every session as bulls eye the 16k mark. But today's rally was mainly backed by the upsurge in few select heavyweight stocks. Tracking positive global cues, the market resumed with a gap of 70 points and immediately breached the 15,850 mark to touch another record high of 15,869. The strong bullish sentiment kept the Sensex in the positive territory throughout the trading session, but a bout of selling in realty and auto stocks dragged the index to the day's low of 15,742 in the afternoon. Despite rupee touching the nine-year high of 40.22 against the US Dollar, the information technology stocks seemed unaffected. The market, however, recovered some of its losses towards the close on buying in few heavyweights, information technology and capital goods stocks and the Sensex finally ended the session at 15,795, up 63 points. The Nifty closed a point up at 4,621.
The breadth of the market was, however, weak. Of the 2,740 stocks traded on the BSE, 1,777 stocks declined, 903 stocks advanced and 60 stocks ended unchanged. On the sectoral front, the BSE CG index was up 1.26% at 13,767 and the BSE IT index gained 1.24% at 4,963. However BSE FMCG index slipped 1.50% at 1,843, the BSE Auto index down 1.40% at 5,126, while the BSE CD index, BSE HC index, the BSE Oil & Gas index and the BSE Realty index were marginally down.
Action in select index heavyweights lifted the market. Reliance Energy led the pack and shot up by 8.46% to Rs775. Satyam Computer soared 5.42% at Rs518, BHEL surged 3.96% at Rs1,835, NTPC flared up by 3.64% at Rs164, HDFC Bank jumped by 2.50% at Rs1,251, L&T added 2.03% at Rs2668, Infosys advanced by 1.53% at Rs1,977, Bajaj Auto moved up by 1.03% at Rs2,448 and Hindalco was up 0.92% at Rs187. However, M&M slipped 3.23% at Rs797, Tata Motors fell by 3.09% at Rs747 and HUL was down 2.13% at Rs200.
Over 1.56 crore Housing Development & Infrastructure shares changed hands on the BSE followed by Suryachakra Power Corporation (1.32 crore shares), IFCI (1.12 crore shares), Spice Telecom (1.09 crore shares) and Reliance Natural Resources (87.16 lakh shares).
Value-wise, Housing Development & Infrastructure registered a turnover of Rs878 crore on the BSE followed by Reliance communication (Rs244 crore), GMR Infrastructure (Rs168 crore), DLF (Rs168 crore) and Reliance Industries (Rs162 crore).
Trading Calls
Buy ABB with stop loss of Rs 1050 for target of Rs 1350.
Buy Lloyd Electric on declines with stop loss of Rs 176 for short - term target of Rs 235.
Buy BHEL with stop loss of Rs 1650 for target of Rs 2000.
No time for break, bulls head to 16k
Bulls kept up the momentum on Monday, raising key indices to new highs. Players are expecting wild swings in the next couple of trading sessions ahead of the expiry of the current month’s derivatives contracts on Thursday.
The heightened sense of caution did little to stop the 30-share Sensex from touching a new high of 15773.4. The index settled at its best-ever close of 15732.2, a gain of 166.7 points or 1.1% over its previous close.
The 50-share Nifty soared to a record of 4628.5 intra-day before closing at a high of 4619.4, up 1.2% over its previous close. Three stocks - L&T, Bhel and Bharti Airtel - accounted for nearly 50% of the rise in the Nifty.
Market breadth was not very convincing, with gainers sneaking past losers 1330:1306. According to dealers, investors booked profits in second-line shares, expecting a correction in the broader market. The constant movement across frontline shares by foreign funds is expected to keep benchmark indices in the upward trajectory.
Capital goods stocks, which have been enjoying earnings upgrades by leading brokerage houses, were the drivers of Monday’s upswing. Bhel, L&T and ABB were the Nifty topscorers, rising 7-8%. “We expect Bhel to win a series of orders from NTPC, DVC, Nuke Power & SEBs, which should result in an historic order intake of Rs 375 billion (+5% year-on-year) and backlog of Rs 714 billion (+30% y-o-y) in FY08,” said brokerage house Merrill Lynch, adding that these orders would offset concerns over increasing competition.
The brokerage house said, “For L&T, an earnings per share CAGR of 28% (FY07-10E) and creation of future-growth vehicles by entering into high-end power equipment, shipyard and expanding defence, nuke & aerospace domains are potential triggers ahead.” Merrill has raised its price target for Bhel from Rs 1,650 to Rs 2,000, and that for L&T from Rs 2,150 to Rs 2,830.
Investors shunned stocks from the banking, pharmaceutical and technology sectors. The market is not expecting interest rates to rise further in the short term, but banking shares were already factoring in near-term positives, following a good run-up in the past couple of months.
The BSE FMCG index rose over 2%, and figured among the best performers in sectoral indices. Gainers were led by Hindustan Unilver, which rose over 5% after the company on Friday said it would consider a share buyback at its board meeting on July 29. In the currency market, the rupee rose to a fresh nine-year high of 40.23 per dollar. However, the Reserve Bank of India stepped in through the state-run banks to buy dollars to prevent the rupee from rising too much in a single day.
Traders in the forex market said that the RBI intervened between 40.25 and 40.30 levels, after which the rupee slipped due to selling of dollars by multinational banks. The local currency finally closed the day at 40.26 level to the dollar.
No time for break, bulls head to 16k
Bulls kept up the momentum on Monday, raising key indices to new highs. Players are expecting wild swings in the next couple of trading sessions ahead of the expiry of the current month’s derivatives contracts on Thursday.
The heightened sense of caution did little to stop the 30-share Sensex from touching a new high of 15773.4. The index settled at its best-ever close of 15732.2, a gain of 166.7 points or 1.1% over its previous close.
The 50-share Nifty soared to a record of 4628.5 intra-day before closing at a high of 4619.4, up 1.2% over its previous close. Three stocks - L&T, Bhel and Bharti Airtel - accounted for nearly 50% of the rise in the Nifty.
Market breadth was not very convincing, with gainers sneaking past losers 1330:1306. According to dealers, investors booked profits in second-line shares, expecting a correction in the broader market. The constant movement across frontline shares by foreign funds is expected to keep benchmark indices in the upward trajectory.
Capital goods stocks, which have been enjoying earnings upgrades by leading brokerage houses, were the drivers of Monday’s upswing. Bhel, L&T and ABB were the Nifty topscorers, rising 7-8%. “We expect Bhel to win a series of orders from NTPC, DVC, Nuke Power & SEBs, which should result in an historic order intake of Rs 375 billion (+5% year-on-year) and backlog of Rs 714 billion (+30% y-o-y) in FY08,” said brokerage house Merrill Lynch, adding that these orders would offset concerns over increasing competition.
The brokerage house said, “For L&T, an earnings per share CAGR of 28% (FY07-10E) and creation of future-growth vehicles by entering into high-end power equipment, shipyard and expanding defence, nuke & aerospace domains are potential triggers ahead.” Merrill has raised its price target for Bhel from Rs 1,650 to Rs 2,000, and that for L&T from Rs 2,150 to Rs 2,830.
Investors shunned stocks from the banking, pharmaceutical and technology sectors. The market is not expecting interest rates to rise further in the short term, but banking shares were already factoring in near-term positives, following a good run-up in the past couple of months.
The BSE FMCG index rose over 2%, and figured among the best performers in sectoral indices. Gainers were led by Hindustan Unilver, which rose over 5% after the company on Friday said it would consider a share buyback at its board meeting on July 29. In the currency market, the rupee rose to a fresh nine-year high of 40.23 per dollar. However, the Reserve Bank of India stepped in through the state-run banks to buy dollars to prevent the rupee from rising too much in a single day.
Traders in the forex market said that the RBI intervened between 40.25 and 40.30 levels, after which the rupee slipped due to selling of dollars by multinational banks. The local currency finally closed the day at 40.26 level to the dollar.
RESEARCH CALLS: Sagar Cements, KPIT
| Sagar Cements, a small-cap cement company, manufactures clinker and ordinary Portland cement, which is marketed under the Sagar Priya brand. It has three plants in Andhra Pradesh. The company has planned a capex of Rs 300 crore, which would be part financed by a debt of $ 19 million sourced from the World Bank. |
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| This expansion will help the company to increase its clinker capacity from 0.65 tonne to 2.5 tonne in order to serve growing demand for cement in the southern states. The new capacity is expected to go onstream by June 2008. |
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| The company achieved a top line growth of 48 per cent in FY07 over the past fiscal, while its bottom line grew by more than seven fold for the same period. At the current market price of Rs 161.9, the stock trades at 6.7 times its FY07 earnings. Recommendation: Buy Current market price: Rs 161.90 Target price: Rs 192 Upside (%): 18.50 Broking firm: ULJK Securities |
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| KPIT Cummins Recommendation: Outperformer Current market price: Rs 137.05 Target price: Rs 172 Upside (%): 25.50 Broking firm: Prabhudas Lilladher |
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| KPIT Cummins delivered good first quarter FY08 numbers. Its top line grew by 3.8 per cent q-o-q to Rs 135.3 crore, operating profit was also up by 4.4 per cent q-o-q. |
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| However net profit declined by 10 per cent q-o-q largely due to low other income and high depreciation. Its BPO arm has entered into an arrangement with Cummins to provide finance and accounting services to its entities worldwide. |
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| The management expects to generate revenues of $55 million (approximately Rs 223 crore) from this arrangement. The company’s offshore revenue mix has been increasing consistently from 32 per cent in FY2005, which drives its profitability higher. |
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| In Q1 FY08, this was pegged at 51.3 per cent, as compared to 50.1 per cent during the previous quarter. At the recommendation price of Rs 135, the stock traded at 16 and 11.5 times its estimated FY08 and FY09 earnings, respectively. |
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| ASHOK LEYLAND Recommendation: Hold Current market price: Rs 39.05 Target price: Rs 44 Upside (%): 12.8 Broking firm: Angel Broking |
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| Although Ashok Leyland witnessed a decline in its volumes by 30.5 per cent to 20,121 vehicles in first quarter of FY08 due to higher interest rates. However, it strengthened its presence in the bus segment, where its sales volume grew by 6.6 per cent y-o-y. |
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| Further, its realisations improved by 6.8 per cent y-o-y, which helped it grow its top line to Rs 1621 crore in Q1FY08 from 1424 crore for the same period last fiscal. Ashok Leyland’s operating margins improved by 250 basis points y-o-y on account of lower raw material cost to sales ratio. |
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| Its net profit grew by 29 per cent to Rs 88.2 crore, and its net profit margin was higher at 5.4 per cent as against 4.7 per cent in Q1FY07. At Rs 39, the stock trades at a price earning multiple of 11.7 times and 10 times its estimated FY08 and FY09 earnings, respectively. |
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| NIIT Recommendation: Buy Current market price: Rs 1142 Target price: Rs 1431 Upside (%): 25.3 Broking firm: Emkay Research |
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| During FY07, the enrolments for NIIT’s GNIIT programme recorded a growth of 112% y-o-y. Further, it hiked the fees for the GNIIT programme by 24 per cent in June 2006, and another 15 per cent in June 2007, a positive impact of which could be seen in its numbers by the second quarter of FY08. |
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| Emkay expects the capacity utilisation for NIIT from its individual training business to increase from 54 per cent in FY07 to 65 per cent by FY09. Emkay expects NIIT’s revenues to post a compounded annual growth of 29 per cent over FY07-FY09. Its operating margins too are expected to expand by 570 basis points to 15.4 per cent by FY09. |
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| This would translate into a 72 per cent CAGR in its earning per share over FY07-FY09. For its estimated FY08 and FY09 earning per share of Rs 48 and Rs 74.4 respectively, at the recommendation price of Rs 1135 the stock was available at a price-earning ratio of 23.7 times (FY08E) and 15.3 times (FY09E) |
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